Vanguard inherited 401k status

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walkabout
Posts: 841
Joined: Wed May 25, 2011 8:28 am
Location: Northern Alabama

Vanguard inherited 401k status

Post by walkabout »

My spouse recently inherited a 401k. The 401k had been untouched previously (no withdrawals, no RMDs, nothing). Spouse is 61, the deceased was 62, so no “special” considerations (that I am aware of).

401k was from MEGACORP and was held at Vanguard. Spouse initiated inheritance/rollover paperwork to roll the 401k over to an inherited ira, still at Vanguard (where spouse already had an active account). The paperwork specified to roll the funds over to an inherited IRA.

After a few weeks, spouse’s Vanguard account showed, seemingly, that the 401k had been transferred/rolled over. The account showed up as something like MEGACORP Plan with the expected balance. The next day (yesterday), the MEGACORP Plan entry was still there, but the value had changed to 0 (zero) with a description of “Termination withdrawal”. In between the balance, seemingly, showing on the account and that balance “disappearing”, there was an email from Vanguard confirming a transaction (that is about the level of detail of the email).

We are trying to figure out what, if anything, happened to the money. My guess/hope is that, in a day or two, we will see a new entry that has the correct balance, but is labeled as Inherited IRA (or something), rather than as MEGACORP Plan.

If it is not obvious where the money is in a day or two, spouse will send a secure message to Vanguard to inquire, but we are hoping that it just shows up.

Does anyone have any experience with a rollover of an inherited 401k like this with Vanguard (where inherited 401k and target inherited IRA are both at Vanguard)?

Thanks for any insight.
Lionel Hutz
Posts: 305
Joined: Sat Jan 30, 2021 1:18 pm

Re: Vanguard inherited 401k status

Post by Lionel Hutz »

It's certainly not the best customer experience, but yes it's likely a benign transfer gap: the 401k was sold on x date so it "correctly" showing a zero balance. The funds are en route to the INH IRA and ought to show up in x+1/2/3 days.

Obviously would be a better experience if there was a bit more connection between the 401k and IRA side, maybe something like the IRA showing open with $0 balance but a "pending transaction" of the amount of the rollover.

That said, things could still go wrong in transit, so if it doesn't show in another day or two, call them.
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