Lost job and need to roll over my 401k

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mjm21
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Joined: Mon Dec 25, 2017 7:46 pm

Lost job and need to roll over my 401k

Post by mjm21 » Tue Mar 13, 2018 1:02 pm

I lost my job at the end of February, and I have a little over 2k in the company’s Fidelity 401K plan (it’s currently invested in a 2060 target fund). The termination package they gave me says that I have 90 days to move my money out of the account if the balance is less than 5k.

I have a Charles Schwab brokerage account and I did some research, and Schwab has a rollover IRA. Here is a link:

https://www.schwab.com/public/schwab/in ... llover_ira

Is it a wise option to roll over my 401K money into a Schwab rollover IRA? Are there any precautions that I need to take?

mouses
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Joined: Sat Oct 24, 2015 12:24 am

Re: Lost job and need to roll over my 401k

Post by mouses » Tue Mar 13, 2018 1:13 pm

I'm sorry about your job. There's a lot of that going on with well-qualified, hardworking people.

I have always rolled over any moneys from a company's control to an outside IRA under my control. I recall it once taking two months for a company to get its act together and make the transfer.

You could roll it over to Schwab, Vanguard, probably even Fidelity, or to a credit union IRA CD, etc.

I'm sure there are procedures that have to be followed so that you don't accidentally lose the tax protected status but it has been so long since I did this that I don't recall what they are. I assume someone will chime in about that.

rgs92
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Re: Lost job and need to roll over my 401k

Post by rgs92 » Tue Mar 13, 2018 1:15 pm

Sorry about your job. Schwab is fine and as good as anywhere. Why go the trouble of having multiple accounts?

billfromct
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Re: Lost job and need to roll over my 401k

Post by billfromct » Tue Mar 13, 2018 1:30 pm

Yes, you want to transfer your 401k to a roll over IRA with Schwab, if that's who you have your other investment accounts with. I'm not sure what the minimum amount is to open an IRA with Schwab. Vanguard has Target Retirement Funds that have a $1,000 minimum to open an account.

I left my job at the end of January & transferred my Fidelity 401k to my Vanguard Roll Over IRA. Fidelity does this every day, but here are some things to be aware of:

-make sure it is a "trustee to trustee" transfer
-make sure Fidelity does not with hold any Federal or state income taxes

For my Fidelity 401k transfer, Fidelity made the check out to "VFTC FBO billfromct" (Vanguard Fiduciary Trust Company; For Benefit Of).

Fidelity sent the check to me (do not sign the check), then I forwarded the check to Vanguard along with a cover letter explaining what roll over IRA account to deposit the check into.

Be very specific & don't leave out any details to Fidelity or Schwab, if that is who you will open your Roll Over IRA.

bill
Last edited by billfromct on Wed Mar 14, 2018 7:28 am, edited 1 time in total.

NancyABQ
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Re: Lost job and need to roll over my 401k

Post by NancyABQ » Tue Mar 13, 2018 1:50 pm

When I did a rollover from my 401k (which was at Fidelity) to Schwab, I talked to a Schwab rep on the phone and he walked me through the whole process, including setting up a 3-way phone conversation with Fidelity to get it all done.

They had to send a check to me, made out to Schwab as the custodian. When I received the check from Fidelity I made a copy of it (always a good idea) and then mailed it to the address Schwab had provided. Couldn't do a direct transfer. I think this is fairly normal for a 401k->IRA type of rollover.

They warned me it might take several weeks to get this all done, but in fact I think it was less than a week altogether.

If you already have a Traditional (non-Rollover) IRA at Schwab, it would probably be good to open a separate "Rollover IRA" account. The reason for this is in the future if you want to roll that IRA back into an employer's 401K then they may have a policy to only accept Rollover funds. If you are making a new account for this, the Schwab rep will have you make a new empty account to be ready to accept the incoming funds.

It was really pretty straightforward.

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Tamarind
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Re: Lost job and need to roll over my 401k

Post by Tamarind » Tue Mar 13, 2018 1:57 pm

If you don't currently have a traditional IRA, it may be worthwhile for you to rollover into a Roth IRA (i.e transfer directly and do the conversion in one step). Given the size of the amount it shouldn't be a lot of tax.

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Watty
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Re: Lost job and need to roll over my 401k

Post by Watty » Tue Mar 13, 2018 10:28 pm

If you want to move it to Schwab you can just call them up and they will likely walk your through the process, at least that is the way that it worked with other companies I have dealt with.

One thing to check on is what the account minimums are.

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Strayshot
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Re: Lost job and need to roll over my 401k

Post by Strayshot » Wed Mar 14, 2018 6:26 am

Tamarind wrote:
Tue Mar 13, 2018 1:57 pm
If you don't currently have a traditional IRA, it may be worthwhile for you to rollover into a Roth IRA (i.e transfer directly and do the conversion in one step). Given the size of the amount it shouldn't be a lot of tax.
This is particularly true if you ever envision utilizing a backdoor Roth IRA, as you will not want any IRA basis held in traditional form because of the pro rata rules.

marstaton4
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Re: Lost job and need to roll over my 401k

Post by marstaton4 » Wed Mar 14, 2018 6:34 am

You may be better off keeping it at Fidelity and rolling to an IRA there. I think you'll likely be charged a $50 account closing fee. Just something to consider. Good luck moving forward with everything.

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