I have to Rollover my 401k to an IRA, What do I do?
A friend recently asked me, "I have decided to rollover my 401k into an IRA, What do I do? In speaking with him about the procedure, I decided that many people probably have the same thoughts about 401k Rollovers, and are intimidated by making a move to an IRA. Here are some general thoughts about what you need to do to rollover your 401k.
If you have decided to hire a financial adviser, they should guide you every step of the way in the rollover process and make sure your 401k is properly rolled over and transferred to their firm.
How to Rollover your 401k to an IRA
The first thing you should do when rolling over your 401k is to find a new place for this money to be moved to. You should open a 401k rollover IRA account at a discount brokerage firm, Mutual Fund or Traditional Brokerage company that will hold your account and act as custodian for the assets you own. Here are the steps to take to Rollover your 401k to an IRA:
1. Request and fill out a new 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. 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, and should go directly to an IRA. 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. 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 plan administrator and tell them that you want to Rollover your account in a trustee to trustee transfer. This will help to speed the process along.
In all events, you should establish an IRA rollover account before you contact your plan administrator. You should take this action because your plan administrator will often send you an application request form that will ask you to specify the name of the institution that will receive your 401k rollover. You need to specify the name of the institution and the account number and title (Rollover IRA, example "Your Name" Rollover IRA).
After receiving your 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 a Fidelity 401k as the brokerage firm to hold your account, then the check will be made out to Fidelity 401k Administrator 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 Fidelity 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 that check to get lost in the mail.
