Can I break up a 401k->401k rollover into multiple transactions?

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jharkin
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Can I break up a 401k->401k rollover into multiple transactions?

Post by jharkin » Fri Jun 22, 2018 12:24 pm

Situation:
* I just changed jobs.
* Old job 401k is at TransAmerica. I have ~$350k in that plan. Investment options are decent (Ive got VINIX, etc) but account fees wont be subsidized anymore.
* New job 401k is at Schwab, even better fund selection and lower fees. (oh and better match and after tax too :beer but thats not relevant to the question below)

I would like to rollover the old 401k into the new 401k, to simplify and keep my options open for backdoor Roth in future (I dont have any other TIRA money right now).

Here is the problem. TransAmerica limits outgoing transfers via check to $250k, and wants to do wire transfer for larger amounts. Schwab *only* allows incoming transfers via check - they wont accept wire transfer. :oops: Adding further headaches, TA wants a medallion stamp for transfers over $150k.

Ive been playing phone tag with customer service from both companies figuring out how to get this done. As a sanity check I'd like to ask here as well: Can I get around these limits by breaking it up into multiple rollovers? i.e. do 3 transfers of ~120k each via check to avoid the wire and medallion requirement? I'd have to spread them out over a couple months to avoid bunching rules, but so far I think this is doable. I also think this gets exempted from the IRS 'one rollover per year' rule because its trustee to trustee, but not sure?


Let me know you thoughts, thanks!!

soccerrules
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Re: Can I break up a 401k->401k rollover into multiple transactions?

Post by soccerrules » Fri Jun 22, 2018 12:28 pm

I would wait to hear from customer services.
I assume TransAmerica has dealt with this issue before and it would be fairly simple.

I am guessing they would send 2 checks at the same time ($250K and $100K) to your new 401K, moving the full $350K in one "transaction.
Don't let your outflow exceed your income or your upkeep will be your downfall.

retiredjg
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Re: Can I break up a 401k->401k rollover into multiple transactions?

Post by retiredjg » Fri Jun 22, 2018 12:28 pm

This does not count as your 1 rollover per year. Can't help with the other issues, but if the two companies talk to each other, I'm sure they will figure it out.

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jharkin
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Re: Can I break up a 401k->401k rollover into multiple transactions?

Post by jharkin » Fri Jun 22, 2018 12:57 pm

Thanks all.... I keep after CS and lean on Schwab to take the lead sorting this out. They have the most incentive here to get my money in :)

ExitStageLeft
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Re: Can I break up a 401k->401k rollover into multiple transactions?

Post by ExitStageLeft » Fri Jun 22, 2018 2:30 pm

Having Schwab do the custodian to custodian transfer is the ticket. It's possible that having the assets transferred in kind means there will be no wire transfer. Make sure to use those magic words though... "custodian to custodian transfer" and "in kind". It should ensure your casting of this magic spell works out in your favor.

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Earl Lemongrab
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Re: Can I break up a 401k->401k rollover into multiple transactions?

Post by Earl Lemongrab » Fri Jun 22, 2018 2:32 pm

The "one rollover" rule only applies to 60-day rollovers between like IRAs. So nothing you do with a 401(k) is affected by that. You want to avoid indirect rollovers from a 401(k) with a significant pretax component, as there is mandatory withholding of 20% on any taxable amounts.
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ResearchMed
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Re: Can I break up a 401k->401k rollover into multiple transactions?

Post by ResearchMed » Fri Jun 22, 2018 2:36 pm

jharkin wrote:
Fri Jun 22, 2018 12:24 pm
Situation:
* I just changed jobs.
* Old job 401k is at TransAmerica. I have ~$350k in that plan. Investment options are decent (Ive got VINIX, etc) but account fees wont be subsidized anymore.
* New job 401k is at Schwab, even better fund selection and lower fees. (oh and better match and after tax too :beer but thats not relevant to the question below)

I would like to rollover the old 401k into the new 401k, to simplify and keep my options open for backdoor Roth in future (I dont have any other TIRA money right now).

Here is the problem. TransAmerica limits outgoing transfers via check to $250k, and wants to do wire transfer for larger amounts. Schwab *only* allows incoming transfers via check - they wont accept wire transfer. :oops: Adding further headaches, TA wants a medallion stamp for transfers over $150k.

Wha
Ive been playing phone tag with customer service from both companies figuring out how to get this done. As a sanity check I'd like to ask here as well: Can I get around these limits by breaking it up into multiple rollovers? i.e. do 3 transfers of ~120k each via check to avoid the wire and medallion requirement? I'd have to spread them out over a couple months to avoid bunching rules, but so far I think this is doable. I also think this gets exempted from the IRS 'one rollover per year' rule because its trustee to trustee, but not sure?

Let me know you thoughts, thanks!!
What "bunching rules" are you trying to avoid?

RM
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jharkin
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Re: Can I break up a 401k->401k rollover into multiple transactions?

Post by jharkin » Fri Jun 22, 2018 4:19 pm

ResearchMed wrote:
Fri Jun 22, 2018 2:36 pm


What "bunching rules" are you trying to avoid?

RM
TransAmerica's rules... They treat multiple transfers within 14 days as a single rollover for the purposes of requiring the medallion stamp, etc.

ved
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Re: Can I break up a 401k->401k rollover into multiple transactions?

Post by ved » Fri Jun 22, 2018 4:58 pm

Yes, this is allowed. I transferred my old 401k to my current employer in increments - I wanted to avoid having the full amount out of the market for the time period it takes to complete the transaction.
But my custodians were not TA & Schwab.

I had to complete forms with both custodians. So, check out the form you have to fill out at the TA side to start the transaction. See if there's an option to transfer only a % of the account. If so, then I think your problem is solved.
Schwab wouldn't care how much is coming in, and how many transactions are there.

Spirit Rider
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Re: Can I break up a 401k->401k rollover into multiple transactions?

Post by Spirit Rider » Fri Jun 22, 2018 7:48 pm

There are no IRS prohibitions against multiple rollovers.

As has been mentioned; the one indirect rollover per 12 month period rule only applies to like IRA -> like IRA and you should not do indirect rollovers from qualified plans because it will be subject to 20% withholding.

The only restrictions on multiple rollovers will be those imposed by the source plan. If TransAmerica allows multiple partial rollovers. You should just follow their rules. I have never heard of a destination plan limiting rollover contributions.

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jharkin
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Re: Can I break up a 401k->401k rollover into multiple transactions?

Post by jharkin » Wed Jul 11, 2018 8:43 am

As a follow up to this:

As expected the way I have to do this is breaking it up into multiple direct (check) rollovers. I spent a bunch of time on the phone with Schwab and was even put through to their "participant investor concierge" who appear to have never dealt with plans that wanted to use wire transfer for large balances, and seemed to know less about the IRS rollover rules than I do :(

I guess its yet another confirmation on all those sad statistics about low 401k utilization rates....

Spirit Rider
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Re: Can I break up a 401k->401k rollover into multiple transactions?

Post by Spirit Rider » Wed Jul 11, 2018 8:47 am

It is rare for qualified plan rollovers to be done electronically unless the qualified plan and IRA are at the same custodian/administrator.

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