How to Transfer a 401k to a New Employer

Your enthusiasm about finding work with a new employer needs to be accompanied by fiscal responsibility. In order to maximize your new 401k account, you need to transfer old funds as soon as possible to increase your returns. The process of transferring funds from one employer to another can be accomplished in a few simple steps.

Difficulty: Moderately Easy

Instructions

Things You'll Need:

• Past 401k election forms and statements
• 401k account numbers
• Direct deposit form

1. Request an election form from your old employer to speed up the transfer process. The election form requires you to write down your new employer, your new 401k custodian and associated account information to ensure your retirement funds get deposited.

2. Submit a direct deposit sheet to your new employer to ensure timely withdrawals to your 401k account. New funds submitted to your employer-sponsored 401k need to be taken from paychecks instead of bank deposits or transfers.

3. Review the contribution level you used in past 401k accounts to determine deferrals for your new account. The period between past and future employment is a good time to evaluate your financial situation, along with the status of your retirement fund.

4. Check out the list of investment options at your new employer to determine a new course for your 401k. Each employer offers a range of retirement funds different from their competition as an incentive for new employees. You should avoid sticking to the same investment plans as past jobs to reinvigorate your retirement funds.

5. Stay away from income taxes associated with your 401k rollover with a direct transfer from trustee to trustee. You can request that funds are electronically transferred between companies to keep the funds out of your hands for tax purposes.

6. Control the direction of your 401k funds by requesting a check from your former retirement fund manager. Once you receive this check, you must deposit the funds through your new 401k custodian within 60 days to avoid incomes taxes during that fiscal year.

7. Compare your old election forms and deposit sheets with new documents to ensure accuracy. You should check account numbers, tax data and contact information several times to avoid clerical mistakes that can affect your 401k.

Tips & Warnings

• Add up the contributions to your old 401k as well as your new account in order to fill out your taxes accurately. According to the IRS, your annual contribution amount is the same no matter how many 401k accounts you utilize. Keep your rolled-over funds from an old job separate in your financial accounting from new deferrals.