Roll Over 401k to IRA, A Step-By-Step Companion

Yea, I agree. It should be easy to roll over 401k to IRA, but sometimes it proves to be a pain-in-the-butt.

Read this section of the site to minimize your hassle.

Where’s your money?

This is the first thing you need to figure out. It’s probably at a big-name financial firm like Fidelity or Vanguard. If you don’t know the answer to this off the top of your head check your old statements. Whoever has your $$ has to send you statements. Find these and there should be a phone number you can call for service.

If you can’t find any statements, check with your old employer. You know, the company that you were working for when you started the 401k. Call them, and ask around to figure out who the ‘Plan Administrator’ (P.A.) is. The P.A. should be able to give you instructions on how to get your $$ out of your 401k and into a Rollover IRA.

If you can’t figure out who the P.A. is, ask somebody in human resources or benefits. If it’s a super-small company, and they don’t have those departments, ask the people in charge. Whether it’s the owner, or your old supervisor. Keep digging, because somebody there knows the answer.

Let your fingers do the walking

The next step to roll over 401k to IRA is to make some phone calls. Once you figure out where your 401k assets are being held, call the company that has them. It will probably be a big institution. You should be familiar with them because you’ve probably received at least a few statements from them since you started this 401k.

Most likely, when you call there will be a recording. Follow the prompts to try and navigate to where you think you’re supposed to be. Talking to a human is often-times the best way. They should be able to transfer you to the exact right place. Try dialing zero to reach a representative.

Where’s it going?

If your 401k was with a big-name firm like Fidelity, they’ll be able to open an IRA for you right there at Fidelity, and the transaction will be easier. (You may even be able to skip the paperwork!)

If not, or if you want to switch firms, you’ll have to open a new Rollover IRA account somewhere else. My favorites are T. Rowe Price and Vanguard. You’ll definitely have to fill out some forms to do this. Here’s a brief description of some of the forms you can expect to see.

Distribution paperwork. This is a form that you’ll file with the sending institution (where your 401k was). It instructs them to liquidate the 401k, not withhold any taxes, and send the assets to whatever address you indicate on the form.

New account form. This is a form you file with the receiving institution (where you want your new Rollover IRA to be). It asks for all of your personal information, has you specify the type of account you want, and creates it.

Contribution transmittal. This is another form you file with the receiving institution. It lets them know where you would like your assets invested. Sometimes the new account form and the contribution transmittal form are bundled into one form. The investment selection area will look something like this:

There’s space on this form to choose 5 different investments. First, specify the investment by name. Then fill in the percentage of your assets (out of 100 percent) that you want to invest in that selection.

So let’s assume you’re rolling your Fidelity 401k into a Rollover IRA that’s also with Fidelity. You choose 5 Fidelity mutual funds that you like, and you want your money split evenly between them. Just for simplicity, we’ll assume the 5 funds are

  1. Fidelity Contrafund
  2. Fidelity Growth Company Fund
  3. Fidelity Value Discovery Fund
  4. Fidelity Overseas Fund
  5. Fidelity Worldwide Fund

*Quick Tip*

Take the time to learn the exact names of the funds you want to invest in by looking them up on the company website. If the company is not 100% sure of your selection (i.e. if they can’t read your handwriting, etc.), they will call you to verify.

Sometimes you end up playing phone-tag with them for a few days or weeks, which slows things up.

You would fill out the form just like this:

  1. Fidelity Contrafund – 20%
  2. Fidelity Growth Company Fund – 20%
  3. Fidelity Value Discovery Fund – 20%
  4. Fidelity Overseas Fund – 20%
  5. Fidelity Worldwide Fund – 20%

For specific instructions, contact the company you’re working with.

If you don’t know what investments to choose, check out our new Mutual Fund Center. (Under Construction)

Roll Over 401k to IRA (Cont.)

Send the distribution paperwork to the sending institution first because they can take several days or even weeks to process. Then send the other two forms to the receiving institution.

*Tip* As you’re dealing with these institutions if you come across a particularly helpful associate, ask for their name and whether you can contact them directly. Certain institutions don’t allow for this, but if they do, it makes your experience better.

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