Old Employer’s 401(k) won’t do direct rollovers

[rachellee]

Old employer’s custodian - Empower.

Empower told me three different times over the phone that they do not do direct rollovers to my new 401(k).

I refuse to do the 60-Day check bs, to be honest (I don’t want to deal with it).

What’s the downside to creating a IRA, to rollover? I already have a roth IRA that i max annually - I don’t want to do conversions or taxes on anything.

Maybe I’m being picky but it’s borderline ridiculous they don’t want to do a direct rollover to another 401(k).

 

[stevenj]

@rachellee

I refuse to do the 60-Day check bs, to be honest (I don’t want to deal with it).

Then you can’t ever rollover a 401k

I refuse to do the 60-Day check bs, to be honest (I don’t want to deal with it).

All or essentially all 401k custodians will send you a check that you forward on to your new 401k

Maybe I’m being picky but it’s borderline ridiculous they don’t want to do a direct rollover to another 401(k

None of them do. If they mail you a check that is made out to your new custodian, it’s still a direct rollover

 

[vannitheng]

@stevenj A rollover by check is still a direct rollover. They all do it.

 

[stevenj]

@vannitheng Yes. Op seems to think that’s not a direct rollover

 

[ilovejeshua]

@rachellee

What’s the downside to creating a IRA, to rollover?

You bork your future ability to make backdoor Roth contributions.

 

[lostinlove]

@ilovejeshua What does this mean?

 

[rachellee]

@ilovejeshua What’re you saying exactly? I rollover a traditional 401(k) to a traditional IRA, and I can’t do a back door Roth conversion 15 years from now?

 

[pmattson]

@rachellee You can do the roll over but you'll pay taxes on a portion of the IRA following the pro-rata rules.

 

[rachellee]

@pmattson I’d prefer to just do a direct rollover from my old employer 401(k) to my new employers 401(k).

Empower (old) said they can only mail a check to my personal address.

What would you do?

 

[luke2242]

@rachellee If the check is payable to the new employer’s 401(k) provider then it’s still a direct rollover even if it’s mailed to you directly. I know Empower will accommodate this. We see checks from them regularly.

 

[rachellee]

@luke2242 Where does the 60-day rule come into play? Any fees?

Fidelity did this thing with my HSA. I submitted a form in their website and that’s it! It transfers few weeks later… does this exist within 401k-401k world?

 

[luke2242]

@rachellee The 60 day rule is relevant if you have empower issue a check payable to you as a lump sum distribution. You wouldn’t want to do this anyway because they’d be required to withhold 20% for Federal taxes and may be required to withhold state taxes depending on where you live.

The process will likely be something along the lines of you telling empower you want to rollover, either by filling out a form or possibly submitting a request online. You’ll need to know how the rollover check should be payable and if there is a plan number they should reference on the memo line. Your new provider also likely has a form for you to complete to tell them where the rollover is coming from. That form will likely include how the check should be payable, what plan number to reference, and where it should be mailed.

Sounds like Empower will require the rollover check to be mailed to the address they have on file for you as a fraud mitigation tactic. This is not unusual.

Once you receive the check you’ll follow the instructions on the incoming rollover form from your current employer.

For fees Empower will likely charge a distribution fee and may offer to send the check overnight for an additional fee. Those fees should be disclosed on a fee disclosure you probably have access to through their website. The receiving plan shouldn’t charge a fee for accepting the rollover.

 

[rachellee]

@luke2242 Thanks!

 

[pmattson]

@rachellee Accept the check to your personal address. You not wanting to do it isn’t going to change what empower will do.

 

[rachellee]

@pmattson Yeah that’s true lol. I can do HSA & brokerage acct rollovers with little issues, but you can forget about just filing a 401(k) from your phone..

But thanks. I’m likely going to double check that empower reps were being truthful and then if they are then I’ll just rip indirect rollover and hope it works out.

 

[pmattson]

@rachellee Why would it not work out. They mail you a check, you mail or take a check to your 401k provider. This isn’t complicated.

 

[rachellee]

@pmattson Just the 60-Day rule and the potential of losing the check instead of ACH or wire.

Maybe I’m misinformed/uneducated, but I feel that should be an option in 2024. But, like you pointed out, my feelings don’t trump Empower’s actions.

But to me these companies are quick to take IN money but will jam you up taking money OUT. It’s purposeful - not to ‘jump to any conclusions.’

 

[stevenj]

@rachellee There’s no 60 day rule on a direct rollover

 

[rachellee]

@stevenj So I can tell my old 401(k) employer to mail me a check made out to my new 401k company. Hold onto it for any length of time I choose and hand it to my new 401k provider and everything is fine?

Like I said, I could be misinformed so this was good/ productive

 

[ilovejeshua]

@rachellee A tIRA balance created today will cause problems if you ever need to make use of backdoor contributions in the future. You can make backdoor contributions, but there will be pro rata taxes.