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How to transfer 401k to new job

How To Transfer 401K To New Job

Have you recently tendered a notice period in your current job and wish to learn how to transfer 401K to new job? If yes, this guide will offer ways to roll over your 401k to your new employer and options for managing the fund.

Every employee in the United States doesn’t joke with activities around 401k because it is the spare engine that automatically starts the work of survival and sustenance after retirement or exit from the job.

So let’s rapidly take you through the steps and methods of transferring your 401k to your new job.

How To Transfer 401K To New Job

You should review your employer’s 401k plans to ensure it is compatible with your old 401k plan and favorable before beginning the transfer process.

However, transferring your 401k to your employer is not compulsory as you can leave it with your old employer, withdraw it or roll it to IRA. But, leaving with your old employer won’t grow the funds, nor will you be able to use it as collateral for loans. So transferring it to your new employer could be an option.

Method of Transferring 401k

You can use two methods to transfer your 401k to a new job. They include the direct and the indirect methods.

The direct method involves you meeting with the payroll administrator of your new job to request the company’s 401k address. Then you mail the address with other vital details to your old employer for rapid fund transfer to the new account, or a check will be sent to the address.

Meanwhile, the indirect method is risky because your old employer will have to issue a check in your name, not the new company, assuming you are cashing out the funds. You will also lose 20% of your 401k to federal taxes. In addition, you must source for the 20% deduction elsewhere, add it to the remaining balance, and deposit it to a new plan within sixty days of withdrawal of 401k.

 

Steps to transfer your 401k to a new job

Once you have concluded to transfer your 401k to your new job, these are the steps to follow:

#1. Meet the Payroll Administrator

You should contact the payroll officer of your new job to discuss and learn about the different plans available and request vital details like contact information, 401K account plan, and other necessary details to simplify the process.

Read Also: how to get a W2 from an old job

#2. Prepare All Relevant Documents

The next action should be for you to get all the relevant documents and those from your new employer to begin the process. Some of the documents include a 401k distribution and authorization form, means of identification, contact details, 401k account number, etc.

#3. Request For The 401K From Your Old Employer

If you have all the required documents, you should complete all the necessary forms and file them accordingly, then submit them to your old employer for review and prompt action.

Also, you shouldn’t relax after submission; ensure you monitor the process transfer process because it usually takes a few weeks to complete. You can always contact your old employer to know the transfer status, especially if the timeframe elapsed.

#4. Review The New 401K Plan

Let’s assume the transfer was successful, and you now have your 401k under the custody of your new employer; you can review the plans available and possibly make necessary adjustments to your contribution.

Final Take

Transferring 401K to your new employer enables you to grow your savings and make proper plans for your retirement. We hope the tips on how to transfer 401K to a new job will provide you the relief or seamlessness you desire in the rollover process.

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