What To Expect When You Do A Retirement Account Rollover


By Cyrus Purnell, Contributor to Forbes, Jul 26, 2021

One of the most common questions we receive centers around the decision of what to do with your old 401(k) account. We analyze multiple ways to look at whether to stay or move strategically, but if you decide to move the funds from one firm to another, how do you best proceed? Here is what to know to make the process as smooth as possible.

Opening the lines of communication

Have you ever seen an old movie or a film set in the early days of the telephone? The switchboard operator actually had to plug and unplug the hardwire lines to connect calls. This is a good metaphor for what happens when you initiate a rollover. You, as the account holder, function as the operator in terms of moving the funds from one company to another. Rolling money over from one account to another is a fairly common practice, but here a few things you will want to consider when approaching this process.

Talk to the firm you are rolling the account from

First, you need to know what paperwork is needed for the money to be released. The best place to find this out is to call your current provider. Do not take anyone else’s word for it. The receiving firm may have a decent idea of what the other firm wants, but there is no way to know for sure if you do not contact the firm you are rolling the funds from.

To start, simply ask them what the procedure is to rollover your assets to another provider.


That question may get you all the information you need, but before you hang up, make sure you know:

·       What timeframe can you expect from when you request the money to when it will be transferred? (This can take up to a couple weeks.)

·       Are there any costs?

·       Is there a need to complete any paperwork?

Be prepared for a little push back - you may be asked to reconsider and talk to someone to help you maintain the account where it is. If you are not interested in keeping your funds there, it is okay to be firm and state that you have made up your mind and to please give you the rollover information without further delay.

Talk to the firm that will be receiving the rollover

Once you know what will be required to get the money out, make sure you are in touch with the company you’ve chosen to receive the money (either your new employer or the IRA company you’ve chosen).


This side is likely to be a bit more flexible regarding the way they receive the money from your old account, but here are some things you will want to discuss with them to make the transition smooth:

·       If the receiving firm is a 401(k) or some other retirement plan at your workplace, be sure they know and understand the type of account the rollover is coming from. The ability to receive funds from another plan or IRA is based on what is in the plan document. Not all 401(k) plans accept all incoming transfers.

·       This also applies to rolling the funds to an IRA. Are the dollars in the old plan pre-tax, after-tax or Roth? This may create a necessity to open both a traditional and a Roth IRA.

·       If the old firm requires sending a paper check, get clear directions on who the check should be made out to. If this crucial step is not taken, you could inadvertently create an indirect rollover and its tax consequences.

You will likely also be asked how you want the money to be invested once it is in your new account. Don’t let this decision delay the process as you most likely can make changes once the funds are there. Just be sure you make some type of selection so the process can be completed.

Initiate the transfer

Once you are clear on what to do from both ends, you can start your switchboard operator magic. It is common to have to sell any mutual funds or other investments in the old account because the new account may not offer the same investment options. This tends not be a big deal in the case of retirement accounts because there should be no tax ramifications for selling, but be aware that may change your mind about this whole process. Transferring cash tends to be a simpler process than transferring shares of mutual funds or stocks anyway.


·       Keep an eye on the process online and maintain any paperwork sent to you about the transfer.

·       Enroll in online access for the new account(s) so you can see when the funds are received.

·       Once the transfer is complete, check to make sure that the amount that left your old account lines up with the amount received in your new account.

·       Consider leaving the old account open for a few weeks to collect any residual interest or dividends in the old account, then make sure those are transferred over as well.

·       You should receive a Form 1099-R from the distributing firm the following year. There should not be anything in the taxable box if you did the rollover correctly, but keep the form just in case. Use the paperwork and online history to make sure the transactions line up properly.

Hopefully, this will help you navigate the steps to a rollover. Depending on your situation, the transaction may be more complex or you may be able skip steps. If you are working with an advisor, they can sometimes simplify the process. In either case, lean heavily on each firm to make sure they are both working toward getting your savings to the right place.