You can transfer your 401(k) account from your former employer to an Individual Retirement Account (IRA). This is referred to as a trustee to trustee transfer.
- Request the distribution forms from your former employer.
- Make sure you open your new IRA before the transfer so that you can provide the account information on the required forms. There are no penalties with a trustee to trustee transfer, but if you allow your former employer to send the funds directly to you and not to your new IRA, they will be required to deduct and remit 20% of the total to the IRS.