What is a rollover?
A rollover involves any steps you might take to change where your retirement account is held. Usually this applies when you leave a job and have to decide whether to consolidate the account into your new job’s 401k, move it to an IRA, or leave it be. An advisor should be able to help you compare the options and make a recommendation based on what is available to you and your personal situation. Transferring directly from one institution to another will help you avoid any taxes or penalties for receiving the money yourself, if done correctly.
How do I complete a rollover?
If you decide to consolidate your old 401k into your new one, you’ll need to check with your current employer’s HR or Benefits department to make sure this is allowed on your new plan. If it is allowed, they should give you paperwork or information on how to get started. You will probably need to contact both the old account’s institution and your new institution. Between your HR department and the institutions, you should be informed of all the steps you need to take.
One thing to be careful about: make sure your previous institution sends the check, or makes the transfer directly, to your new institution if possible. If that is not allowed, they may mail you a check instead, in which case make sure the check is made out to the new institution instead of your own name. If the check is made out to you personally, it will likely be seen by the IRS as an early distribution, subject to a penalty as well as income taxes. Don’t lose your hard-earned money on a technicality!
How can blooom help?
At blooom, we want to help you feel confident in your rollover process and choices. As a blooom client, our financial advisors can help you review your options and recommend if rolling into your new 401k, leaving it where it is, or opening an IRA will be the best choice for you. They can look at the plans available to you and compare costs and fund options. To initiate a rollover you will need to contact the institutions directly as we cannot move the funds on your behalf, but we’ll help you make those decisions. Read more about what these options may look like in our blog post, Changing Jobs? What happens to my 401k.
Published on August 19, 2021