The main difference between a traditional IRA rollover and a transfer is that a rollover is the special type of tax-free transfer of a retirement account into an IRA.

A 401k rollover is an option that comes with very few tax consequences. If you setup the rollover incorrectly you could face tax liability that is unexpected.

You can roll a 401k plan over into a Roth IRA. However, when you do so, you will have to pay ordinary income tax on the amount rolled into the Roth.

Even so, a Roth IRA will usually perform better over time, as the money not only grows tax free, but is taken out tax free as well.

There are some great calculators out there that will show you the impact of conducting this rollover. See attached link.

If you do a 401k rollover properly, there are no tax implications associated with the transfer. To do so, you will need to rollover your funds directly into an IRA from your old 401k.

As a word of caution, if this is not done properly, then you could possibly be taxed at your ordinary income tax rate plus 10% on the amount.

Before you rollover your 401k there are many things you need to be aware of. The biggest thing you should look in to is tax rules regarding your 401k. You will probably be able to draw from your account but you will also owe a sizeable amount of tax on the money when tax season comes around.