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Rolling Over My 401(k) To Vanguard

Posted By Jim On 01/23/2007 @ 9:42 am In Retirement | 7 Comments

Today, I severed one of my last ties to my old job, my 401(k) plan. The process for rolling over my 401k to a Rollover IRA at Vanguard was fairly painless but there are several areas that you need to keep an eye out.

First, talk to the benefits department of your former employer to see if they have a specific process you have to follow. At my old employer, I really only had one option – get a check for the value of my assets sent to me (but made out to the IRA company, not to me; otherwise it would be subject to 20% withholding). But before I could get that check, I would have to setup a Rollover IRA account because you are required by law to deposit the rollover check within 60 days and I didn’t want any hiccups messing everything up.

This meant that I needed to have opened a Rollover IRA account at Vanguard first. So, going to the Vanguard website, opening one up was easy until I reached Step 3 where I was presented with this question:

Check with either your former employer’s benefits office, or the financial institution currently holding your assets, to find out which option best describes what you need Vanguard to do.

  • Send my financial institution a written request. The financial institution holding the assets from my employer-sponsored plan requires a written request from Vanguard to initiate the rollover.
  • Provide an account number only. I completed (or am in the process of completing) my termination paperwork (paperwork for the financial institution currently holding my assets) and instructed (or will instruct) the financial institution to send my assets to Vanguard. Before the financial institution will send these assets, I need to provide the account number for my new Vanguard IRA┬«.
  • Complete and return my paperwork. My financial institution requires Vanguard to complete its termination paperwork, provide an account number, and return the termination paperwork per the instructions provided.

Based on what I know from my former employer’s benefits office, I really just need to select option 2 – Vanguard does nothing, I just present the account number to my former employer to finish the process. (as an aside, I had to liquidate my self-direct investment option with Charles Schwab and transfer it into my core funds before I could initiate a rollover, so I sold 84 shares of Fortune Brands for $84.84 for a gain of 6.66%… how creepy is that?)

Anyway, now I wait for my check from my old 401k plan…


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