Many people have a 401k plan at work that they’ve built up over the years. When you quit or leave your job for any other reason, there are a couple options you have. You can keep your funds in the old employer’s account, move it to your new employer, or transfer it to a 401k rollover account. For many reasons, the 401k roll over could be your best bet.

With so many people saving more today, and also an increased possibility of being laid off and changing jobs, using the 401k rollover option is a way to maintain some control over your retirement security. Unfortunately, the roll over is not very well explained or understood by most investors.

A rollover IRA is just an account where you can transfer the 401k funds you saved in your previous employer’s plan. With a rollover account, you will handle management of your funds instead of keeping them in your old employer’s plan. To open a rollover account, you just open a rollover IRA account with a broker of your choosing. The new broker will help you handle the paperwork to transfer everything into your new account. Just don’t make any withdrawals at this point, to avoid any penalties or taxes.

There are four main options for yoru 401k funds when you leave your employer:

1) Take a cash withdrawal, on which you will pay up to 40% in taxes and penalties; 2) Keep your funds with your previous employer’s plan; 3) Move your old 401k balance into your your new employer’s plan, or 4) Move funds into a new 401k Rollover IRA account at a broker of your choice.

Choosing #1 is not a good idea unless you are in serous, dire financial difficulty. Choices #2 and #3 are conservative, hands off type decisions. Only #4 will give you a new chance to really build up your account balances for retirement.

By keeping your funds in an employer’s plan, the investment options you have are limited to usually a few large funds, some international funds for diversification, and possibly a money market option. There is no opportunity to take advantage of timely market changes and shift your funds into vehicles with a higher potential for returns.

Within a self directed IRA however, you are able to actively manage your account. You have complete access to the thousands of mutual funds on the market, as well as ETFs, stocks, bonds and any of the investment vehicles available within a regular brokerage account.

With a self directed IRA your chance to profit is much greater. For example, if you can boost your returns from the 8% you might be getting in your employer’s plan, up to 12% in your self directed account, on a balance of $50,000 you would retire with more than double the balance you’d have if you had left your funds with your employer’s plan.

The possibilities of growing your account by switching your retirement account into a 401k rollover, can make a huge difference for you financial future.

When you switch jobs or retire, a Rollover IRA gives you a choice of investments going forward that are not available in an employer-sponsored plan. A self-directed IRA allows you to structure your retirement portfolio to increase the growth of your retirement savings.