How do I roll over a 401(k)?

401(k)s are different than standard brokerage accounts when it comes to moving the assets to a different institution. The ease (or difficulty) is completely dependent on how your employer set up your plan.

FutureAdvisor can help you through this process if you wish to apply to Premium with a former employer plan.

1. Determine if you have a Roth 401(k).

If your employer has made a Roth 401(k) available to you, you would have set a separate contribution rate for Roth assets and should see this reflected on an account statement or in your online profile through the plan administrator. Be careful - typically your Roth and Traditional 401(k) assets are combined into one total for your 401(k). Look at your contributions section to see if a portion of your 401(k) contains post-tax (Roth) contributions.

2. Open up your new IRAs - where the assets will be moved to.

We help Premium clients open accounts at TD Ameritrade or Fidelity. If you have Roth 401(k) assets, we will open both a Roth IRA and Traditional IRA to ensure the assets remain separate, and in the correct tax status. If you're doing this on your own, you'll need to reach out to your desired custodian for the appropriate paperwork to open your account(s).

3. Call your plan administrator to initiate the rollover.

This is the biggest difference between 401(k) rollovers and transfers. 401(k)s very rarely allow you to initiate a rollover online or via paperwork only.

You can typically find the contact information for your plan administrator online or on your account statement. Most plans will take your verbal authorization over the phone to initiate the rollover. They will ask you to verify your identity and where to send the assets, including your account numbers for the new Traditional IRA and Roth IRA you opened. They will typically liquidate your account and send a check directly to your new custodian, or to you directly.

Some require additional paperwork, or something called a Letter of Authorization. FutureAdvisor can help you obtain this letter and submit your rollover paperwork if needed.

4. If a check is being mailed to you, confirm with your new custodian how best to deposit these assets.

Firstly, always make sure that your new IRA account numbers are written on your checks before you mail. If the plan administrator did not fill this out for you, please ensure that your Roth IRA account number goes on the check for your Roth 401(k) assets, and the Traditional IRA account number on the check for your Traditional 401(k) assets.

FutureAdvisor Premium clients receive an instruction packet with a pre-addressed envelope to their custodian, and can simply drop the checks into the mail once they receive it. If you've opened an IRA on your own, you can contact your new custodian for a mailing address to send the check, or many custodians allow you to deposit the check at a local branch.

5. Check again in approximately one week to ensure the assets were deposited correctly.

FutureAdvisor will do this for Premium clients once alerted that the check has been mailed. If you're doing this on your own, it's important to verify that the account values match what you expected, to ensure your Roth and Traditional assets were not mixed for any reason. If you only had Traditional IRA assets, it's an easy check!

If you're wondering whether rolling over your plan makes sense for you, contact us at vip@futureadvisor.com or read more here.