It is often difficult what option you should use to get your funds out of your existing 401k account. One of the major stresses of this process is the uncertainty of what exactly you should be doing. Add this stress to already existing stress of managing your retirement account and the whole process can be rather overwhelming.

Though the decision of where to transfer your funds in not simple to make, it is critical that explore your various options available to you. The first thing that you will want to do is consult with your tax advisor and/or financial planner.

Your financial consultant or tax advisor will be able to tell you whether to transfer your funds into another 401k, IRA account, or other investment vehicle. As a professional they will be updated on the latest tax news and regulations.

As with many other tax issues, the IRS has complicated the process enough that a tax professional is required to sort through the rules. One of the rules that often traps investors is the 60 day transfer rule.

The 60 day rule is in reference to the allocated time available to transfer the funds out of your existing account into your new retirement account. Once you have determined to transfer your 401k, they expect you to take care of the transaction. You should be prepared to make the decision and take action on the account.

Regardless of how trivial this rule is, the IRS is rather stringent on the execution of it. Most good financial planners will instruct their clients to prepare for the transfer by making their decisions beforehand. This allows you sufficient time to make all of the fund movements, and ensures that you don’t miss the deadline.

You shouldn’t make the assumption that the Internal Revenue Service will be forgiving with this rule. In fact, quite the opposite is true. Even cases involving only one or two days has incurred the penalty and been rejected appeals.

There are only a couple of different situations in which the IRS may be somewhat lenient of this 60 day rule. Most of which are rather extreme and not likely to apply to you. In cases such as incarceration, hospitalization, disability, or death, the Revenue Service may consider your appeal. This compassion ruling does come with some stipulations also. There is often a fee associated with the IRS waiving this penalty due to hardship.

Roger Harrison is an experienced financial planning enthusiast that has extensively studied how to do a 401k ira rollover and the best ways to transfer your money. Visit him online at the The 401k Rollover Guru for more information on these and other related topics.