Get 401(k) Rollover Checks Mailed Directly to IRA

Email  Print Print  

A couple weeks ago I received a letter from my former employer’s 401(k) benefits company notifying me that I had $0.83 in my 401(k) account. Despite my best efforts avoid dividends and distributions on funds, I must have missed one in the process. I was told that since my vested account balance was less than $1,000, I’d have to roll it over or take a distribution, which would be taxed and penalized.

I was in a quandary. At such a small dollar amount, it certainly wasn’t worth the time to roll it over. If it appreciated at an average rate of 7% a year for forty years, it’s would be worth a mere $12.43. That’ll be enough to buy me a pack of bubble gum after taxes in 2049.

Why not just take the $0.83 distribution? I did this last time when I had a little less than $5 because the hassle just wasn’t worth it. They withheld 20%, which was less than a $1, and my accountant, upon seeing this, laughed. Since the tax withheld was less than a dollar, it was rounded into oblivion. 20% was withheld and I never even got credit for it… so I was doubled taxed on the rollover.

Out of principle (and, to be honest, stubbornness), I wasn’t going to let it happen again. The tricky part is that at such a small dollar amount, the cost of a stamp would make it a losing proposition. The solution was to have the 401(k) plan mail the rollover check directly to Vanguard. In the past I’ve always had the check mailed to me and then I mailed it to Vanguard along with instructions of how the funds were to be invested. I was forced to do this because one of my employer’s 401(k) plan refused, as a matter of their protocols, to mail the check directly to another plan. Fortunately, this was a different employer and they were willing to mail it direct.

As with any rollover, find out the information that the receiving institution requires before sending the check. In my case, Vanguard needed the check to be made out to VFTC (Vanguard FTC or Vanguard Fiduciary Trust Corporation), FBO [Account Holder’s Name] (this is typically automatically on a rollover check), and a Fund-Account Number pair. Then you mail it to their standard PO Box 1110, Valley Forge PA address.

Should be settled in 7 business days and hopefully this is the last I hear about this account!

{ 9 comments, please add your thoughts now! }

Related Posts

RSS Subscribe Like this article? Get all the latest articles sent to your email for free every day. Enter your email address and click "Subscribe." Your email will only be used for this daily subscription and you can unsubscribe anytime.

9 Responses to “Get 401(k) Rollover Checks Mailed Directly to IRA”

  1. thomas says:

    I wonder how much it is going to cost everyone to move that $.83

  2. April fools joke? In October?

    Best regards

  3. eric says:

    The pain……..!

  4. A physical, paper, check?

    I hate to guess how much it cost the two entities to deal with the check.

  5. Allan says:

    About a month ago I closed out my BofA savings account as the interest rate was too low. A couple weeks later, they sent me a check for 14 cents (due to interest).

    Did I deposit the 14 cent check? You betcha!!

    Although they should have just direct deposit it into my checking account (I have a BofA checking account).

    As a side note, I did transfer ALL the money out of my savings to my checking prior to closing out the account, but because I did it mid-month, it generated the 14 cent interest.

  6. Mike says:

    I’ve also had that issue with a savings account with a balance of 27 cents. I just let it ride to see how long they send me statements. It’s funny to see the money they spend on paper and postage!

    BTW… it’s been about 2 years and they keep coming.

  7. zapeta says:

    If you’re going to roll over any retirement account to an IRA, you should always get the money directly sent to the IRA so that you can avoid messing with the previous employer withholding taxes. Plus, then you don’t have to mess with passing the check along.

  8. Debra says:

    What a lot of trouble you went to for $.83! When you think of how many things like that we all have to deal with, it’s a wonder we ever get anything meaningful done. I recently had $1 left over in a checking account I forgot I had — and no checks. The bank said the only way I could close the account was to come in and do it in person. I asked how I could stop the waste of the monthly statements without making a trip to the bank & was told the only way was to go online and request e-statements instead of paper. By the time I had set up the on-line banking arrangement for this ridiculous purpose I was fuming at having had to waste so much time over $1. American businesses sure are inclined to “sweat the small stuff”!

  9. Debra says:

    Who chooses the emoticons? I’ve posted 3 times (this will be 4) and so far all have been frowning faces.

Please Leave a Reply
Bargaineering Comment Policy

Previous Article: «
Next Article: »
Advertising Disclosure: Bargaineering may be compensated in exchange for featured placement of certain sponsored products and services, or your clicking on links posted on this website.
About | Contact Me | Privacy Policy/Your California Privacy Rights | Terms of Use | Press
Copyright © 2016 by All rights reserved.