I recently changed jobs, and my previous employer offered a 401k. I know I can roll that money into an IRA. Before I do anything, I would like to understand what options I have, and which option is best.
What recommendations do you have?
Usually the best advice is to find a company that offers IRAs containing low-cost index funds. Vanguard is a noted example. Open a rollover IRA there and invest in funds the lazy way. Pick an allocation by using the asset-allocation tag here to get the information you need about international stocks, domestic stocks, bonds, risk tolerance, and where you can find way more information. Rebalance that allocation every 12-18 months. Other than that, ignore the market. Unless you have the resources of a hedge fund manager, and maybe not even then, you won't be able to beat indexes like the S&P 500 on their performance.
Why should you go this route? A little-touted fact about retirement investing is that one of the best ways to grow your money is to choose funds with the lowest expense ratio (percentage of your earnings that go to the fund managers).
See these questions:
The right answer for you is entirely dependent on the company's plan and your investment style. The answer to all financial questions isn't "park it in a Vanguard index fund". There are other investment styles and options that you may prefer. If you worked at a large company with a good plan, you may have access to closed funds or institutional class funds with lower costs or better performance.
I work for a government employer, who offers a very well administered 457b plan (similar to a 401k). They take a best in class approach to selecting investment options, and have funds from a number of companies that are screened for a number of factors. When/if I separate from this employer, I'll almost certainly stick with it as long as it continues to be administered well.
My previous employer was a private company who had an awful 401k with high fees and investment options from only one company that were awful. The poor quality of the plan was a significant factor in my leaving, and I obviously left the plan.