How to Transfer Your 401k to a New Job With Empower

When changing jobs, managing your previous employer’s 401(k) can seem complex, but understanding your options is straightforward. A 401(k) transfer or rollover moves funds from your old workplace plan to another qualified retirement account. This maintains the tax-advantaged status of your savings, ensuring continued growth. Deciding what to do with these funds is a routine part of career transitions.

Understanding Your Options for an Old 401k

Upon leaving a job, individuals have four options for their old 401(k). One option is to leave the money in the old plan, if permitted by the administrator, especially if the balance exceeds a threshold (often $5,000-$7,000). This maintains tax-deferred growth, but new contributions are not allowed, and investment options may be limited or less favorable.

Another strategy is to roll funds into your new employer’s 401(k) plan, if it accepts rollovers. Consolidating savings can simplify management and provide a holistic view of your retirement readiness. However, assess the new plan’s investment options and fees, as they may differ from your previous plan or an Individual Retirement Account (IRA).

A third option involves rolling the old 401(k) into an IRA, which can be either a Traditional IRA or a Roth IRA. A rollover to an IRA generally offers a broader range of investment choices and potentially lower fees compared to some employer-sponsored plans, providing greater control over your retirement assets. If you roll a traditional 401(k) into a Traditional IRA, the funds continue to grow tax-deferred, and there are typically no immediate tax implications. Conversely, rolling a traditional 401(k) into a Roth IRA is considered a Roth conversion, meaning the amount rolled over is subject to ordinary income tax in the year of the conversion, as Roth accounts are funded with after-tax dollars. For Roth 401(k)s, rolling over to a Roth IRA is generally tax-free.

The least advisable option is cashing out the 401(k) account, taking a lump-sum distribution. This triggers significant tax consequences and penalties. The distribution is taxed as ordinary income, and if you are under age 59½, a 10% early withdrawal penalty usually applies, unless an exception is met. The plan administrator is generally required to withhold 20% for federal income taxes. This option significantly reduces retirement savings and hinders long-term financial growth.

Distinguishing between a direct and indirect rollover is important. In a direct rollover, funds transfer directly from your old plan administrator to the new account custodian, electronically or via a check payable to the new institution for your benefit, which avoids immediate tax withholding and potential penalties. With an indirect rollover, funds are distributed directly to you, and you have 60 days to deposit the full amount into a new qualified retirement account to avoid taxes and penalties. If the full amount, including the 20% withheld, is not redeposited within 60 days, the distribution becomes taxable and subject to penalties if you are under age 59½. Financial professionals recommend direct rollovers to minimize risks and ensure a smoother process.

Gathering Information for Your 401k Transfer or Rollover

Before initiating a 401(k) transfer or rollover, gathering specific information and documentation is important. This ensures all necessary details are at hand for both your previous plan provider and the new destination account. Organizing this information beforehand prevents delays and complications.

From your old 401(k) provider, you will need:
Your account number
Contact information for the plan administrator (phone numbers or website addresses)
Your current account balance
Your vested balance

Also, understand the distribution or rollover forms required by your old plan, noting the general information they request. These forms typically ask for details about the recipient institution and the type of rollover.

For the new destination of your funds, whether it is a new employer’s 401(k) or an IRA, specific details are also required. If rolling into a new 401(k), you will need the new employer’s plan administrator contact information, the plan’s name, and its plan number. Additionally, obtaining the routing instructions for incoming rollovers is necessary, as this dictates how the funds will be received by the new plan. If you are rolling over into an IRA, such as one with Empower, you will need your IRA account number, the custodian’s name (e.g., Empower), and the routing information for receiving the funds.

Beyond account-specific details, personal identification information is required. This includes your Social Security Number, current mailing address, and contact details (phone numbers, email addresses). Ensuring this information is accurate and consistent across all records is important for identity verification and communication.

Finally, decide on the specific type of rollover before collecting information. For instance, knowing if you plan a direct rollover from a traditional 401(k) to a traditional IRA versus a Roth IRA dictates specific forms and tax considerations. This clarity ensures you collect the precise information needed for the chosen transfer method, streamlining subsequent steps.

Initiating Your Transfer or Rollover Through Empower

Once you have gathered information and decided on your 401(k) rollover, initiate the transfer process with Empower (your old provider, new provider, or IRA custodian). Submission and post-submission monitoring are the focus, ensuring funds move accurately and efficiently.

Contact Empower, typically through their online portal or by phone. If Empower administers your former 401(k), log into your account and navigate to “distributions” or “rollovers” to initiate the request. If Empower is the destination for your funds (new 401(k) or IRA), access your account to provide necessary information for the rollover.

When using an online portal, general navigation steps usually involve logging in, locating the appropriate section for transfers or rollovers, and selecting the “direct rollover” option. This digital pathway often guides you through a series of prompts to input the information you have already gathered about your old plan and the new destination account. Empower’s process is designed to be streamlined, often allowing electronic initiation without the need for a physical check.

Complete and submit the required forms. Input the gathered information into Empower’s specific forms, available digitally or requiring printing and mailing. Ensure all fields are accurately filled, especially account numbers, routing instructions, and the precise amount to be rolled over. If a physical check is issued for a direct rollover, it will be payable to the new institution for your benefit, not directly to you.

After submitting your request, track the transfer’s progress. Empower typically provides ways to monitor status, including confirmation emails, online trackers, or direct communication from their support team. Processing times vary, generally from a few days to a couple of weeks, depending on transfer complexity and party responsiveness.

Finally, understand what to expect post-submission. You may receive follow-up requests from Empower or the previous/new custodian if information is unclear or additional documentation is needed. Once the transfer is complete, confirm funds have arrived in the new account by checking your account balance and statements, ensuring the full amount has been received and properly allocated.