My 401k rollover experience.

[Alan]

This month I am in the process of rolling my 401k from a company plan managed by Schwab to Vanguard. When we did a similar thing in 2004 with DW's 401k, managed by TRowe Price, to her Fidelity accounts it was a piece of cake. DW called Fidelity who called TRP and it was all over and done with in 15 minutes. She had a new Rollover IRA and ~$200k was in process of being transferred electronically.

I called VG and they said I needed to contact Schwab to see how they would handle the transfer. The rep then talked me through setting up a Rollover IRA ready to receive it. Easy peasy, and I now have an account number, and although the rep told me how to have them word the "make payable to" section on a paper check, I really didn't expect to have to go that route.

I then called Schwab and the rep said that I had to have them mail me a termination package to be completed and he took me through the screens on my account to request such forms, but when I got part way through I got a message saying that I couldn't request the package on-line, so the rep told me he'd request the termination for me. A few days later I get the package and discover that the only electronic transfer options are via ACH transfers and I could provide the ACH details for my chosen brokerage or for my personal bank. In bold it stated that to wire the money was not an option.

It also stated that if a paper check was issued it would be sent to me, not to the new broker, but I could specify who to make the check payable to, including my account number.

I checked with VG. They only accepted money by wire, not ACH, even though I send money by "electronic transfer" (not by wire) to my accounts from by bank quite often. I considered doing ACH to my bank account and then via electronic transfer to my new VG account. But, if I went that route Schwab said they had to hold back a 10% tax penalty (in case I didn't put it in an IRA within 60 days).

I chose the paper check option made out to VG and sent to me. It arrived yesterday via UPS and I then took it to my UPS store and have sent it on, hopefully to arrive on Monday.

Is this typical? Have others had to go through this archaic paper system?

As an aside, I was telling DW that I hadn't been to the bathroom for a couple of days and was considering taking some laxatives. However, a couple of hours of handling a check for ~$500k has sorted out that problem

 

[braumeister]

Wow!
Terribly sorry about that. It bears out my experience, where Fidelity has absolutely outstanding customer service, and Vanguard has absolutely abysmal customer service.

I'm sure you'll get it done OK, since Vanguard is reliable, but that's way too much hassle.

 

[LOL!]

I read stories like this all the time. Only the actors change names. It seems that Vanguard knew what was going to happen. They probably had others try to transfer from Schwab.

I've even heard that if you use Fidelity for 401(k) that it's best to rollover to a Fidelity IRA, and then transfer IRA to Vanguard.

It just seems that 401(k) to IRA is the problem, not IRA to IRA. That makes sense if you figure that rules for 401(k) (must terminate employment) are different than for an IRA.

As an aside, do you tell your spouse when it hurts to pee as well?

 

[Alan]

As an aside, do you tell your spouse when it hurts to pee as well?

Only after it stops hurting

 

[jazz4cash]

Is this typical? Have others had to go through this archaic paper system?

Yup
Consistent with my recent experience from a Fidelity-managed 401k to a Penfed IRA. I usually request check be made payable to the receiving institution FBO (my name) and have them put "Rollover IRA" in the memo section. As a side note, some 401k's permit rollovers while working and some do not, but that is just a side n

 

[Aiming_4_55]

Yes, consistent with my experience in late 2010. They normally send the check 1st class mail, but for an extra charge, it can be sent overnight mail. Same with Vanguard, 1st class mail goes to a PO Box (could take up to a week) and overnight gets an address (process quicker). A few extra $$ for overnight mailing.

 

[swampwiz]

I had to do the same thing when I rolled over my 401K from my main employer (a BIG defense contractor) to a brokerage. I had to liquidate the mutual fund positions, followed by processing for a paper check to be sent to me (made out to the brokerage I was rolling over to), which I had to forward to the brokerage for THEIR processing, etc., which caused me to be out of the market for 5 market days, netting me a loss of .75%. I suppose it could have been worse, but it sure would have been nicer to have done the transfer during the collapse of September 2008.

Fortunately now, I can do rollovers as direct in-kind transfers of a mutual fund (or stock) so there would be no loss for being out of the market.

 

[Bestwifeever]

... When we did a similar thing in 2004 with DW's 401k, managed by TRowe Price, to her Fidelity accounts it was a piece of cake. DW called Fidelity who called TRP and it was all over and done with in 15 minutes. She had a new Rollover IRA and ~$200k was in process of being transferred electronically.....

I'm thinking I see a solution--just let DW handle it! Easy peasy.

 

[easysurfer]

When I transferred my 401K from Fidelilty to Vanguard, I too went through the paper check only situation and make it out not to me. I too remember my nerves and thinking in this day and age, they can't just wire to money from one place to another.

I suppose since Fidelity and Vanguard are in competition, they make the future retirees sweat it out.

How many time I checked and double and triple checked to make sure I had written the TO address correctly for the large summed check being sent.

 

[Alan]

thanks for the responses, it's good to see others have gone through a similar process, and it is annoying to be out of the market for several days. After mailing my forms to Schwab I started checking on-line and was pleased to see a "termination transaction in process" which confirmed that they had received the forms. Next day when I logged on ( 19th ) I saw that the balance was zero. The check arrived on the afternoon of the 21st (a Friday) and I sent it on, to arrive on Monday morning (24th). I don't know how long it will take the check to clear but I'm expecting to be out of the market for at least 5 days, similar to swampwiz.

 

[Dreamer]

This is something else that I need to do. I took an early retirement in 06/06 and left my money in the Thrift Savings Plan, where I plan to keep it. However, we need to move DH's 401K to Vanguard also. I hate doing this type of stuff.

 

[Major Tom]

I transferred a company 401k to a Vanguard IRA a couple of years ago with no hitches. However, a few years before that, I transferred both my ROTH and traditional IRA from Firstrade to Vanguard and the process was drawn out and painful. Vanguard were very helpful, but Firstrade screwed it up royally. In the process, the contents of my ROTH were transferred to a traditional IRA with Vanguard, and the contents of the traditional IRA were transferred to a ROTH at Vanguard. On top of that, Firstrade were unable to completely close one of the accounts and it was left with 51 cents in it. After 2 years of calling them about this annoying detail, I finally had them close the account down and told them to keep the change.

I'm not quite sure what I was doing with Firstrade to begin with, and am very happy to now have the majority of my holdings with Vanguard.

 

[Nords]

thanks for the responses, it's good to see others have gone through a similar process, and it is annoying to be out of the market for several days. After mailing my forms to Schwab I started checking on-line and was pleased to see a "termination transaction in process" which confirmed that they had received the forms. Next day when I logged on ( 19th ) I saw that the balance was zero. The check arrived on the afternoon of the 21st (a Friday) and I sent it on, to arrive on Monday morning (24th). I don't know how long it will take the check to clear but I'm expecting to be out of the market for at least 5 days, similar to swampwiz.

You may be out of the market for a few days, but you'll eventually overcome that. The consolation is that instead of having to pay for real customer service, let alone the 3rd-millennium convenience of online transfers, you're saving 40 or 50 basis points per year in expense ratios. Hopefully it's worth the hassle.

What irks me is when Vanguard goes campaigning for more business, only to be shocked-- shocked I say-- that they can't handle it.

 

[BTravlin]

I transferred funds from DW's 403b funds at Oppenheimer & Fidelity to American Century and it was very easy. One phone call plus two signed and scanned documents and the American Century rep took care of everything from there. Only been with them a few months but have been impressed with their customer service so far.

 

[scrabbler1]

I recall my final days in 2008 getting all the post-retirement paperwork done. That included how to separately handle the different parts of my 401(k)/savings plan/ESOP from Principal Financial Group (which handled all of my instructions perfectly) with rather complex instructions, some of which I had to prepare days before my last day. The toughest part here was getting a signature from my bank manager because the electronic payment was going to exceed $100k. It was a minor ordeal. I also needed my signature on the forms notarized but a friend of mine at my old company is a lawyer so he did it for me easily.

Once all the money soon arrived in different forms (rollover check, electronic transfers) and at different times, I made a trip to my local Fidelity office to get my money working for me. The rollover check was made out to Fidelity with an account number I had received from the rep I had been working with for the previous few months. Once at the Fidelity office, I chose to allocate the rollover's proceeds into two funds in a similar proportion to how they were in my 401(k). I set up the bond fund account with the ESOP proceeds which would provide me with my dividend income to cover my monthly expenses.

All in all, it went very smoothly. I was out of the market for about 12 days but I knew that was going to happen so it was not a big deal.

 

[Alan]

Being out of the market for a few days isn't really a big deal but it is just another annoyance. In England we sold 4 houses, first one in 1979, the last one in 1992 and the monies were transferred electronically. In 2004 we sold our main home here in the USA and was very surprised at closing to be handed a very large check, which we then had to carry to our bank for deposit, and we thought that was very [-]backward[/-] [-]quaint[/-] inefficient.

The 401k termination and transfer documents did require a notary to validate DW's decline of a joint annuity, and the form said that was what the law required, which was fair enough and only cost $5. (Texas notaries are a lot cheaper than Louisiana).