Get Paid to Roll Over Your Retirement Plan

Rising unemployment not only displaces workers, it displaces 401(k)s and other retirement accounts, too. And for brokerages, this trend has created a rare opportunity: a chance to steal retirement-account clients from their competitors.

When layoffs occur, some employers automatically clear out the accounts of former employees with balances of $5,000 or less, while others charge higher fees if the former employee wishes to stick with the company plan, says Pamela Hess, director of retirement for Hewitt Associates, a human resources consultant. Hoping to grab these potentially lucrative long-term customers, brokerages like TD Ameritrade and E*Trade are offering cash bonuses of up to $500 and other incentives to those who either open a new IRA or roll over their existing account into one.

“Rollover money is very sticky, and very profitable,” says Hess. “Companies are eager to woo those dollars.”

But consumers shouldn't just move their cash solely for the bonus, warns Sheryl Garrett, founder of the Garrett Planning Network, a national group of fee-only financial planners. That strategy is OK if you were transferring a checking or savings account. But with retirement accounts, choosing one based on its investment options and fees is much more important.

Also, transferring 401(k), IRA or other retirement account balances is a process rife with potential tax missteps, says Ed Slott, a New York-based CPA who specializes in IRAs. “Do it wrong and you may get the $100 bonus, but now the $300,000 you transferred is taxable,” he says.

Here are some of the bonuses currently being offered: