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What to anticipate within the occasion of a retirement account rollover

Shot of a mature couple doing their paperwork together at home


One of the most common questions we get is deciding what to do with your old 401 (k) account. We analyze several ways to see if you should stay strategic or move, but if you do decide to move funds from one company to another, what is the best way to go about it? Here’s what you need to know to make the process as smooth as possible.

Opening the communication channels

Have you ever seen an old movie or movie set from the early days of the phone? The operator actually had to plug in and unplug the hardwired lines to connect calls. This is a good metaphor for what happens when you initiate a rollover. You, as the account holder, act as the operator in the transfer of funds from one company to another. Transferring money from one account to another is a fairly common practice, but here are a few things to keep in mind as you approach this process.

Talk to the company you are rolling the account from

First of all, you need to know what documents are required to release the money. The best way to find out is from your current provider. Don’t take other people’s word for it. The receiving company may have a good idea of ​​what the other company wants, but there is no way you can know for sure unless you contact the company you are handling the funds with.

To get started, just ask how you are transferring your assets to another provider. This question may give you all the information you need, but before you hang up make sure you know:

· What time frame can you expect from the money request to the transfer? (This can take up to a couple of weeks.)

· Incurred costs?

· Do you have to fill out any paperwork?

· Which addresses do you have on file?

· Can correspondence only be sent to these locations?

Be prepared for a little pushback – you may be asked to reconsider and speak to someone who can help you keep the account where it is. If you’re not interested in keeping your money there, it’s okay to stand firm and explain that you have made up your mind and please give you the rollover information immediately.

Talk to the company that is receiving the rollover

Once you know what it takes to get the money paid out, make sure to get in touch with the company that you have chosen to receive the money (either your new employer or the IRA company you have chosen). This page is probably a little more flexible about how they’ll get the money from your old account, but here are a few things you should discuss with them to make the transition smooth:

· If the acquiring company is a 401 (k) or other retirement plan in your workplace, make sure they know and understand the type of account that the renewal is coming from. The ability to receive funds from another plan or an IRA is based on what is in the plan document. Not all 401 (k) plans accept all incoming wire transfers.

· This also applies to rolling the funds to an IRA. Are the dollars in the old plan before tax, after tax, or Roth? This can create a need to open both a traditional and a Roth IRA.

· If the old company requests a paper check to be sent, they will be given clear instructions on who the check should be written to. Failure to do this critical step could inadvertently create an indirect rollover and its tax implications.

You will also likely be asked how to invest the money once it is in your new account. Don’t let this decision delay the process as you will most likely be able to make changes once the funds are in place. Just make sure you make some sort of selection for the process to complete.

Initiate the transfer

Once you know what to do from either side, your attendant magic is ready to start. It is common to sell mutual funds or other investments in the old account as the new account may not offer the same investment options. This is usually not a big deal with retirement accounts as the sale shouldn’t have any tax implications, but be aware that it can change your mind about this whole process. Transferring cash is usually easier than transferring shares in mutual funds or stocks.


· Keep an eye on the process online and keep all the documents sent to you about the transfer.

· Sign up for online access for the new account (s) so you can see when the money has been received.

· After the transfer is complete, check that the amount left your old account matches the amount received on your new account.

· Consider leaving the old account open for a few weeks to collect any residual interest or dividends on the old account, and then make sure these are transferred as well.

· You should receive a Form 1099-R from the distributor the following year. The taxable field shouldn’t contain anything if you did the rollover correctly, but keep the form just in case. Use the paperwork and online history to make sure the transactions are properly aligned.

Hopefully this will help you navigate the steps to a rollover. Depending on your situation, the transaction may be more complex or you can skip steps. Working with a consultant can sometimes make the process easier. Either way, you should rely heavily on each company to make sure they both are working to get your savings in the right place.

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