Rolling Over Your 401(k) Is Annoying (But You Should Do It Anyway) - Money Under 30
Rolling over your 401(k) after you leave an employer is essential. Actually doing it, however, is a pain. Follow these steps to take some of the sting out of the process.

Rolling over your 401(k) when you leave your job is essential. Some employers won’t allow former employees to keep money stashed in their plans, and, after a certain amount of time, may just cash out your investments, sending you a check with taxes and the 10 percent early withdrawal fee taken out. And, even if they don’t, you may be able to get lower fees and better fund options elsewhere.

Now, the benefits of rolling your 401(k) are obvious and undeniable. The actual process of rolling over your 401(k) into a new plan, I’m sorry to tell you, is exceptionally tedious. (Surprise!)

I’ve recently gone through the excruciating experience of rolling over not one, not two, but three different accounts into a single IRA at Vanguard. I don’t wish the process on my worst enemy.

Every broker and plan is different, but here are some guidelines to make rolling over your 401(k) a little easier. And we should warn you, it’s a very manual process that almost always involves phone calls and snail mail. (Rolling over your 401(k) to Betterment is an exception. They claim to be the only financial institution to offer a completely paperless rollover process.)

Gather your documents (and ensure your information is up to date)

Before you start, check your accounts. Make sure your contact information (and even your name!) is the same across all your different accounts. Get out your last statement, find your account number, both of the 401(k) you’re rolling over and of the rollover IRA you’re rolling it into. (Don’t have a rollover IRA set up yet? Do that first). If you don’t have your Social Security number memorized, find that too.

I had terrible trouble getting a necessary form from Vanguard sent to me (it took a month, and several phone calls), and it may have been because of slight discrepancies between the personal information listed on my different accounts. Or simply the whim of cruel fate.

Call your brokerage and get them to lead you through it

I know, I know. You hate the phone. I hate the phone. We—and by “we,” I mean everybody under age 40 or so—all hate the phone. And, yes, doing things via the web is so much easier, involves less dreaded social interaction, and features almost no annoying interactive menus whose options have recently changed. I’m with you on this, but the current requirements of modern banking simply aren’t.

While it’s possible you’ll be able to rollover your 401(k) or other employer-sponsored plan using only your brokerage’s online interface, it’s pretty unlikely. And, should something go wrong (or simply not work), that website will not help you at all.

You can try to email them through the “secure messaging” service, but they will likely tell you it’s not secure enough to send sensitive documents. There are all sorts of requirements that likely aren’t made clear on the website. The person on the other end of the line should know what those are, and, if they don’t, they can push your issue up to someone who does.

When I tried to roll over my 403(b) from TIAA-CREF via its website, it told me that only about a third of my funds were eligible for withdrawal, even though I knew I was fully vested. I only learned why from the customer service representative: My employer plan (rather than my own contributions) had more stringent requirements for rollover or withdrawal.

In addition, the terminology used on the website can sometimes be frustratingly vague, and I was quite worried during more than one of my rollovers that I was requesting a traditional withdrawal, which would trigger fees and taxes, rather than a direct rollover. (Note: If you have options, always go for the direct rollover.)

As an added bonus, the brokerage you’re rolling over to will often offer to call the brokerage you’re rolling over from to expedite the whole process. Take advantage! They are happy to be getting your money, so they’ll do everything they can to help. (The brokerage you’re rolling over from is less likely to be so helpful, but TIAA-CREF was pretty chill for me.)

Be prepared to print, scan, and mail things

Oh, and possibly get them notarized as well.

TIAA-CREF allowed me to sign and scan the necessary documents, and send them back via their messaging service. (They also allowed me to self-certify that I wasn’t married, which we’ll get to in a minute.)

Vanguard, and the retirement plan for Ohio public employees, did not. Vanguard required a signature and that I mail the form back to them. The public employees fund, on the other hand, required that I sign and get the document notarized before either mailing or faxing it back to them.

Why is this all required? Because of the Retirement Equity Act of 1984!

That law, signed by America’s Handsome and Senile Grandpa, Ronald Reagan, was passed to keep people from screwing over their spouses. Thus, to roll over your 401(k), start taking withdrawals, or change beneficiaries, you have to get your spouse’s signature. And if you’re not married, you’ve got to swear to your singleness in writing.

The particulars of proving that you are acting with the approval of your spouse vary from plan to plan. Some might simply require a signature; others require notarization. If you’re not married, some nice plan administrators might allow you to just swear to that by checking a box.

For notarizing, you can get it done at UPS for $7.50. If you have a AAA membership, they will also notarize things for you, usually for a small fee. You may also want to call your bank or credit union, as they usually always have at least one notary on staff, and are happy to notarize things for members. If you work in a big enough company, there’s probably somebody who’s also a notary somewhere.

If you don’t have a scanner at app德扑圈官方网址home (and who does?), then there are several iPhone or smartphone apps that will do. (I use GeniusScan).

All of this is crazy annoying, and counter to our expectation that transactions be smooth and seamless. But there’s often a lot of money on the line in these transactions, and those plans don’t want to be responsible for money being moved when it shouldn’t be.

It’s a pain, but it’s all in the name of protecting your money.

Summary

Rolling over your 401(k) can be a tedious experience, but the rewards outweigh the temporary headaches. Once you’ve consolidated your money into a rollover IRA, it’ll be a lot easier to move it around, since so many of these requirements come from the employer plans, and not from the brokers themselves. If all of this sounds like a major drag, consider Betterment. They offer what they call a “60 second” and completely paperless rollover.

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About the

Total Articles: 49
Lauren Barret is a staff writer at Money Under 30. She has an MFA in creative writing from The Ohio State University, and a BA from Kenyon College. She lives in Portland, Maine.

Article comments

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8 comments
Natasha says:

What if the fees are significantly lower in your old 401k? Like 3 times lower? I was considering rolling everything over until I checked that, and decided to stay put with my existing funds. I don’t believe there is a requirement to move the money.

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Lauren Barret says:

As long as the old employer has no problem with you keeping your money there, there’s no harm in doing so. It’s really just about not losing any of your money to fees/penalties you can avoid.

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Syed says:

My rollover process wasn’t too bad but receiving a check for that huge sum of money is a little unnerving. I made sure to mail it out to the new company right away!

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Adam says:

I just went through this process. I went from a Wells Fargo 401(k) to a new Wealthfront IRA.

The process (for me at least) was super simple. I created my empty IRA account on Wealthfront’s site, then filled out the rollover from I got from my employer when I left them. After I returned the form to HR (I scanned and emailed it back to them), it was about 3 or 4 weeks later that I got notice that the funds had been transferred successfully.

More-or-less a completely hands-off experience.

Yes, calling’s never a bad idea, as I did get a bit nervous having to wait as long as I did. But know that phone-free options do exist.

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Lauren Barret says:

Good to know! I find the online advisors to be slightly easier. I rolled over a Roth IRA from USAA to Betterment with little to no hassle–just a lot of time. But my most difficult one was going from a Vanguard employer plan to a Vanguard IRA.

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M.L. says:

Thanks for the tips! I rolled over a Fidelity employer plan to a Fidelity Rollover IRA without much effort. I created the Rollover account first and the assets were transferred to the IRA. I got on the phone and was able to purchase the mutual funds that I wanted. To make sure that you don’t pay excessive trade fees, ask for a list of mutual funds and ETFs that can be purchased at no cost (Schwab, Fidelity, TD Ameritrade and most brokerages have some). I have two more 401Ks to rollover.

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Lauren Barret says:

Awesome! Thanks for the tips!

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Dvora Inwood says:

I have been trying for months to move out of the high fee awful wells fargo 401k of my previous employer to my own private no/low fee ira at Fidelity and it’s unbelievable how many ‘surprise’ additional steps come my way from wells fargo, super slowly, all snail mail so that they can keep on collecting fees. It should be considered fraud at this . point. If someone is moving money from a 401k to an ira in the same name it should take a minute online.

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