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 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.
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. For many providers, IRA transfers at Betterment are automated. For other providers, Betterment will work with you to help complete the transfer. You could also consider Wealthfront who offers rollovers as well. From there, you can choose your own investments or pick a pre-built portfolio made by the experts at Wealthfront.
MoneyUnder30 receives cash compensation from Wealthfront Advisers LLC (“Wealthfront Advisers”) for each new client that applies for a Wealthfront Automated Investing Account through our links. This creates an incentive that results in a material conflict of interest. MoneyUnder30 is not a Wealthfront Advisers client, and this is a paid endorsement. More information is available via our links to Wealthfront Advisers.