Steps To Rollover 401k Plans
The key step in doing a 401(k) rollover is making sure that the money never gets into your hands. Once a single dollar ends up in your bank account, you have a problem.
To keep the money out of your hands, you initiate a rollover or trustee-to-trustee transfer of your 401(k) funds via the custodian of the new account. Typically, the custodian is a brokerage firm, though it can be a bank, or other financial institution. (Note that rolling a 401(k) into another 401(k) plan is a different process.)
The first step to rolling over your 401k is to open a new retirement account that will house the money that transfers from your 401(k). This account will also need to be a qualified retirement account, normally, a traditional IRA. It cannot be a Roth IRA.
Next, you will need to fill out paperwork from the new custodian to initiate the transfer or you will have to call the 401k plan administrator depending upon how your plan was setup.
If you can use the paperwork route, do that. It will help avoid any mistakes. Your broker or investment advisor can help you complete the form.
If you have to make a phone call, ask for a financial professional from your new custodian to make the call with you as a conference call. This way, you can verify that you are saying the right things.
After the transfer has been started, the funds will either be transferred directly to your new financial institution, or you will be sent a check made out to your new account. The check is not made out to you even if you see your name on it, so do not sign the check. Instead, deliver it to the financial institution without altering it or writing on it in any way. They will deposit it in your account for you.
That’s all it takes.