401k Rollover

Now that you have decided that you should roll over your 401k and you further decided either to hire some one to help you or to do it your self, so what are the practical steps that you should take you ask? 

If you have decided to hire an adviser, then your adviser, who should be familiar with 401k rollover rules, should guide you every step of the way in the 401k rollover process and make sure your 401k rollover is properly done in compliance with the IRS.

401k Rollover to IRA

In the event that you have decided to do a 401k rollover on your own, the first thing you should do is find a new place for this money to be moved to. You should open a 401k rollover IRA account at a discount brokerage firm or a Mutual Fund company that will hold your account and act as a custodian for the assets you own in this account. The steps you should take in order of priority are as follows: 

1. Request and fill out a new rollover IRA retirement account application from the brokerage company of your choice.

2. When filling the application, make sure you specify that this will be a “Rollover IRA” account, not a regular IRA account. You are doing a 401k rollover to IRA.

3. Request and fill out an “Account Transfer” form from the same brokerage firm you are moving your account to. Make sure to indicate that this is a transfer from your 401k retirement plan. Make sure to have your last 401k account statement handy. From this statement you will enter the name of the company that is holding your account in the “Transfer From” space. This not your employer. This should be a Fidelity, Merrill Lynch, or similar financial services company that has custody of your 401k money and securities. Under Account number/name you will have to enter the savings plan name on that statement. This is not your name. It should be your company’s named 401k savings plan. If you work for XYZ Co, then the account name/number will be something close to “XYZ CO. 401(K) Savings Plan”. This may be the name of the parent company you work for in the event you work for a division or a subsidiary of a large company.

4. Make a copy of the last 401K statement you received and mail the whole thing (New account application, transfer application, and copy of your last 401k statement) to the new brokerage company you chose.

In some events, this may be all you need to do. But quite often and almost always, you may still need to contact your 401k plan administrator and tell them that you want to do a 401k Rollover of account in a trustee to trustee transfer. You will get the contact info of your plan administrator from your previous employer’s HR department or by calling the number that is on the 401k statements you receive in the mail.

 In all events, you should establish an IRA rollover account (albeit an unfunded one yet) before you contact your plan administrator. This is the reason because your plan administrator will often send you an application request form that will ask you to specify the name of the institution you are rolling over your account to. You need to specify the name of the institution and the account number and title (usually Your Name Rollover IRA, example Jane Doe Rollover IRA). After receiving your 401k withdrawal request form, the administrator will either directly deposit the funds in your new account at the financial institution you specified or (most probably) send you a check for the value of your account made out in your name and the name of the Financial institution. For example if you chose Ameritrade as the brokerage firm to hold your account, then the check will be made out to Ameritrade FBO Jane Doe Rollover IRA. FBO stands for “the benefit of”. With the check in your possession, you should mail it along with a deposit slip or any other document indicating your account number at Ameritrade for example. It is strongly recommended that you send it in certified or other traceable mail format with return receipt requested. You certainly don’t want the 401k rollover check to get lost in the mail. 

The whole 401k rollover process can easily take between two to four weeks.

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