Rolling over a 401(k) shouldn’t be a big headache, but for many people it is—and sheer dread (or lack of information) can lead you to avoid rollovers altogether.
In fact, when you want to complete a 401(k) rollover, your former employer may put up roadblocks, according to a 2013 Government Accounting Office (GAO) report.
The GAO also found that your former employer won’t explain all the possible alternatives, might mislead you about account charges, or encourage you to roll your 401(k) over to an Individual Retirement Account (IRA) within the same institution, even if it’s not the best option for you.
We offer a better solution. By rolling over your 401(k) to Betterment, you’ll experience a fast and easy rollover process. Afterward, you’ll benefit from an automated investment engine that keeps you on track to meet your goals, offers transparent, low-cost investment advice, and uses tax-efficient tools to maximize your money’s growth and returns.
You’ll also benefit from an investment manager who is a qualified fiduciary. This means that you’ll receive transparent advice that is in your best interest, and not swayed by outside fund providers who offer commissions for investment product recommendations.
How to Roll Over Your 401(k) to Betterment
Betterment does not charge a fee for rolling over your old 401(k).
The first step is to create a Betterment account, and then you can start your rollover online. Get started by clicking “Start Rollover” at the top right-hand side of your Summary tab. We’ll send you a personalized email with all the steps, including how to transfer your 401(k) funds to Betterment.
You’ll want to contact your 401(k) provider and let them know that you’re rolling over your funds to Betterment.
Your provider will then release your 401(k) funds by issuing a check—either directly to us, or sent to you, which you can then forward to us at the address here and also provided in your email. The same fund transfer process applies for any other employer-sponsored plan.
Apples to Apples
Remember that a traditional, tax-deferred 401(k) should be rolled over to a traditional IRA (otherwise your rollover funds may be subject to taxes). Though rarer, funds from a Roth 401(k), can be rolled over to a Roth IRA.
If you’re not sure what type of retirement account you have, and which rollover account to set up, our guide makes it really easy and will help you find out your account type.
Knowing your account type is important. For example, if you try to roll over a 401(k) to a Roth IRA, it’s considered a Roth conversion and you’ll likely owe taxes on that transfer of funds.
(If you’re wondering about how to roll over an existing IRA to Betterment, you can do that with us as well.)
Ask About Fees
While it’s free to initiate a Betterment IRA rollover, your 401(k) provider may charge you for closing your account. As you’re starting a partial rollover of your 401(k) funds, ask your current plan provider whether you will incur any fees.
Once your Betterment rollover account is setup, you’ll begin to benefit from some of the lowest investing fees in the industry.
Whatever you do, don’t procrastinate or let your investments sit idly by with your company’s 401(k) provider. Roll your 401(k) over to Betterment now.
Disclaimer: When deciding whether to roll over a 401(k) account or other retirement account, you should carefully consider your personal situation and preferences. Relevant factors may include that: (i) 401(k) accounts may offer greater protection from creditors than IRAs. (ii) In some cases, the ability to take penalty-free distributions at an earlier age or to defer minimum required distributions. (iii) Some 401(k) accounts may also allow for loans or distributions in a broader set of circumstances than IRAs. (iv) Some 401(k) plans may also offer specific educational and advisory services to participants that are unavailable to some IRAs. (v) Some 401(k) plans may have lower fees and expenses than some IRAs. (vi) Some IRAs may offer a broader range of investment options than some 401(k) plans. (vii) Special tax rules may apply to the rollover of employer securities.
You should research the details of your 401(k) and speak to a tax and other advisors about whether the features of your 401(k) are relevant to your personal situation. The rollover process is currently automated for rollovers from select providers. If you have a provider that is not part of our automated process, you will receive an email with a checklist for completing your rollover to Betterment. In processing your rollover request, Betterment will be acting at your direction.
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