Leaving Your Job? Don’t Forget Your 401k
If you have lost your job or are looking for a change, don’t forget about the 401k account you have with your current employer. You are still entitled to take the funds with you when you leave a job but you need to manage the account the right way to get the maximum gain.
Many people make the mistake of taking the money out of the account. They end up paying much in penalties for early withdrawal and deplete their own accounts for retirement unnecessarily because they don’t know what else to do. So what should you do with the money you’ve been stocking away?
Rolling Over Your 401k
In order to keep the money you have in your retirement account, you can opt to rollover the funds into another account without having to pay taxes or penalties on the amount. You can choose from a number of options for rolling over your 401k account including your new employer’s 401k plan, IRAs, Roth IRAs, and Mutual Funds.
How to Rollover the Funds
Contact Old Provider
Check with your old 401k provider for eligibility rules. You’ll want to make sure there are no fees or requirements involved with rolling over your funds into a new account. You also need to make sure that your status is listed as a terminated employee because funds can not be released unless you are terminated. Sometimes an employer will fail to update the provider so knowing upfront that all is in order will help make the rollover process smoother.
Contact New Provider
You’ll need to contact the new provider of the account to find out the protocol for rolling over your money. Even if you are not rolling your money into another employee-sponsored account, there will still be paperwork to submit so you’ll need to know the rules of the new provider. Ask for the information you will need to give to your old provider to initiate the transfer of funds.
Fill Out the Forms
Your 401k provider should send you the paperwork necessary. Once you receive the documents fill them out completely and return them to your provider. Some providers will only require documentation from the new provider and you won’t have to do anything. You will also need to submit paperwork to the new provider. The key to a successful rollover is to fill out forms completely the first time to prevent delays. Provide accurate information about where the money is to be transferred.
Make Sure You Follow Up
Follow up by phone to find out the status of the transfer if you have not received correspondence from the provider within a few weeks. Never assume the money was transferred as scheduled. It is smart to confirm the funds are where they are supposed to be. It can be easy to forget about money that you virtually never see so check with the new provider to verify the money transfer has been completed.
Tags: 401k, new job, retirement accounts, rollover, savings
