6 Tips for Rolling Over Your 401(k)

Adam Carlat |

The average American worker will change jobs more than once in their lifetime. While there are multiple options such as leaving your 401(k) in your former plan if allowed, cashing out the account balance, or transferring the 401(k), many decide to roll over their old 401(k) to their new employer's plan or other investment vehicles such as an IRA, Roth IRA, or an annuity. Here, we provide tips to help the rollover process go quickly and smoothly for you.

1.  Check with the 401(k) custodian or plan administrator to see if a rollover is possible.

Considerations for a rollover include the time the account has been open and any fees associated with the outgoing transfer. If you're still employed, and you want to move your 401(k) to another financial professional or custodian to manage, additional rules and fees may apply.

2. Request all transfer out paperwork from your HR department or the 401(k) custodian.

Also, ask if other signatures or a 'signature medallion stamp' will be required on the paperwork to complete the transfer. Signature Medallion stamps guarantee the account. Your 401(k) custodian, plan administrator, or fund company accepting the transfer can provide the medallion stamp for you.

3. Include the latest 401(k) account statement with your transfer paperwork.

This includes statements with your name, address, account number(s), and date within the last three to six months.

4. Realize you have options.

You have a choice of where to transfer your 401(k)'s assets, the type of account, such as an IRA, Roth IRA, or annuity, and the type of investment strategies available to you in each investment vehicle. If allowed, you may also roll over your 401(k) to your new employer's 401(k). For this process, you will need to understand the investment strategies, fees, and timeline for transferring your old 401(k).

Discussing these options with your financial professional so they can assist you with the transfer is a good idea. 

5. Understand the fees associated with transferring your 401(k) assets to a new account type.

Ask your financial professional to explain the fees to you during the rollover initiation meeting as you review the transfer form and associated paperwork.

6. Be patient.

Some custodians process their 401(k) very quickly, while others transfer very slowly. Ask your financial professional to keep in touch with you regarding your 401(k) transfer progress. If the transfer doesn't occur within a month, check in with your financial professional or custodian where your 401(k) is transferring for follow-up.

An active role in financial planning includes bringing 401(k) plan assets from previous employers together, which may provide additional investment choices, rebalancing opportunities, risk analysis, and ongoing monitoring. It's important to not leave your 401(k)s where you can't actively manage them as you work toward your goals and retirement timeline.


Important Disclosures

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial professional prior to investing.

This article was prepared by Fresh Finance.

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