Whether you are rolling your 401k due to an unanticipated dismissal or a voluntary move to another employer, you now have increased levels of stress at play in your life. That stress can be can be the result of being unemployed or adjusting to the demands of a new job.
You do not need the additional stress of worrying about your 401k rollover. Your rollover is not something that you need to do immediately, or ever, for that matter. However, in my view, you should rollover your 401k to your new employer, if for no other reason than it makes your life and finances easier to manage. You have a variety of choices, and the one thing you must avoid is withdrawing your money with no plan in place. Consider any financial emergencies and take the time necessary to consider all your options. Your money is not going anywhere!
If you decide to rollover your 401k, the following steps should guide you through the process.
1. Confirm Eligibility
Contact your old provider and confirm your status as a terminated employee. No funds can be released unless you’re terminated. Inquire as to what penalties, fees, or restrictions are involved in closing your account. Surprises are for birthdays … not your rollover.
2. Get Your Forms
While you’re on the phone with the old provider don’t hesitate to request the paperwork you’ll need to initiate the rollover. Make your intentions clear, tell them you wan to do a rollover, and ask for the forms needed. Ask if you will get the forms by mail or if possible, electronically. Certain providers only honor rollover requests forms from your new plan. Now is the time to find out your old provider’s policies.
3. Meet the Needs of Your New Provider
Your new account provider will also have requirements to accept the rollover. Every provider has its own process. Some might require that you open up an account first and follow with the rollover form. Others create the account and process the rollover concurrently. Regardless of new provider’s requirements, you need to be certain that you have all applicable information from your former provider to conclude the transaction.
4. Accurately Complete the Forms
You might be dealing with your life savings here. I don’t want you to be intimidated, but I do want you to be careful. Depending on providers, these forms can have a great deal of information. Make certain you complete your forms accurately. If you have questions, pick up the phone!
For example, the form from your prior provider asks for the type of distribution. Assuming you want the funds transferred to the new provider and payable to the new account, you will indicate “direct rollover.” This means you will need to know the proper payee for the check, or you might even need to know wire transfer information. Don’t hesitate to contact your new provider for any information you require or to ask about anything you do not understand. Make no assumptions! Contact your previous or future provider to receive clarification on anything that is unclear to you. Errors can delay the process and occasionally providers can fail to notify you that there is a problem. Take the time you need now and avoid delays later.
5. Submission and Follow Up
Before submitting, ensure the address information is correct for both your new and old provider. Previous providers are understandably reluctant to lose your account and do not be shocked if they drag their feet or fail to alert you if there is a problem with your paperwork in a timely manner. After all, what is their incentive! I strongly advise diligent follow up on your part. While it isn’t a good idea to make a pest of yourself, you want to follow up if the new provider hasn’t received a check in two weeks. Start by confirming your paperwork is in order If there are issues, arrange to have the forms returned for correction or provide the necessary information by phone. Remove any excuses for further delays. Stay on your game until you or your new provider receives the funds. If the old provider delivers the check for the funds to you, be sure to get it to your new provider immediately.
I’d like to hear from our readers regarding their rollover experiences. How did your rollover experience go? Do you have anything to share with other readers?