Author Topic: 401k account closing fee  (Read 4554 times)

frugalnacho

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401k account closing fee
« on: October 01, 2014, 04:02:19 PM »
My wife called the company her 401k is at and said she wants to roll her 401k into an ira at vanguard, and asked what she needed to do.  They emailed her a separation from employment withdrawal request form to fill out. 

He said they have an account closing fee of $125 that is deducted from the account before they send it to vangard.  Is that normal?  He said it was non negotiable and built into the plan.  I have never rolled a 401k over though.

It also requires us to get it notarized.   Is that normal?  Is there not a way for her to verbally consent? It's a huge deal, but I would rather avoid it if it's unnecessary.

Beric01

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Re: 401k account closing fee
« Reply #1 on: October 01, 2014, 04:15:27 PM »
My wife called the company her 401k is at and said she wants to roll her 401k into an ira at vanguard, and asked what she needed to do.  They emailed her a separation from employment withdrawal request form to fill out. 

He said they have an account closing fee of $125 that is deducted from the account before they send it to vangard.  Is that normal?  He said it was non negotiable and built into the plan.  I have never rolled a 401k over though.

It also requires us to get it notarized.   Is that normal?  Is there not a way for her to verbally consent? It's a huge deal, but I would rather avoid it if it's unnecessary.

That's ridiculous. Why should you have to pay a fee to have access to your own money? I would ask for the specific text that your wife supposedly signed agreeing to paying this "fee".

Eric

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Re: 401k account closing fee
« Reply #2 on: October 01, 2014, 04:23:37 PM »
In my experience, the fee for closing and transferring your money is normal.  I've never heard of having to get the authorization notarized though.

frugalnacho

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Re: 401k account closing fee
« Reply #3 on: October 01, 2014, 04:37:12 PM »
My wife called the company her 401k is at and said she wants to roll her 401k into an ira at vanguard, and asked what she needed to do.  They emailed her a separation from employment withdrawal request form to fill out. 

He said they have an account closing fee of $125 that is deducted from the account before they send it to vangard.  Is that normal?  He said it was non negotiable and built into the plan.  I have never rolled a 401k over though.

It also requires us to get it notarized.   Is that normal?  Is there not a way for her to verbally consent? It's a huge deal, but I would rather avoid it if it's unnecessary.

That's ridiculous. Why should you have to pay a fee to have access to your own money? I would ask for the specific text that your wife supposedly signed agreeing to paying this "fee".

Yea I feel the same way.  They were getting their cut of her entire portfolio the whole time, so it seems ridiculous to have a closing fee.  It's her damn money.

In my experience, the fee for closing and transferring your money is normal.  I've never heard of having to get the authorization notarized though.

Still seems like a bullshit fee.

She can either have the plan administrator sign it, or in lieu of that we can have it notarized.  We are friends with a notary that is coming over next week, so that's actually more convenient than having her plan administrator sign it.

hexdexorex

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Re: 401k account closing fee
« Reply #4 on: October 01, 2014, 04:39:05 PM »
It is almost industry standard now. Whatever company she transfers her money to should reimburse the fee if the account value is large enough. In this case she should call vanguard and ask.

fuzzhead1506

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Re: 401k account closing fee
« Reply #5 on: October 01, 2014, 04:40:35 PM »
i used to work in 401(k) administration... $125 seems pretty reasonable to me.  when I worked there, it might have been about $75 to rollover the account - there is a surprising amount of work that goes into losing a customer to another business.  i'd be willing to bet that your plan has offered documents proving that this fee exists in the last 2 years (if not earlier; for example, when she signed up for the deduction) - considering that it is now against the law to have that fee hidden.  also, if the employer (trustee) hasn't sent this info regarding the fees, you should consider relaying this information to them as they could be in SERIOUS trouble with the IRS.... there are MONSTROUS that accompany that lack of due dilligence.

if you weren't aware of the fee, it is important that you make yourself aware of what you are signing with the new custodian of your assets

indeed a notarization is something that should be required! i am surprised that they don't require more than that - i suspect they really want a Medallion Signature Guarantee from Vanguard! "Medallion Signature Guarantee" which is an indication from the receiving bank that the person signing for the money is who they say they are and have authorization to accept the money (a responsibility given to a trustee).  how would you feel if someone was able to get access to your account (somehow) and had a notary buddy that was ready to "witness his signature" and then cashed the check and took off for mexico 2 days after it cleared the bank.   

it would probably also be wise to remember that this process sometimes takes a pretty good chunk of time.. AT THE VERY LEAST, high priority clients (not likely, since they are loosing your business) would get the money rolled over in a week.  Expect more like 45 days, but stay on their heels or have your Vanguard rep do so

best of luck

Beric01

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Re: 401k account closing fee
« Reply #6 on: October 01, 2014, 04:42:58 PM »
Still seems like a bullshit fee.

If I were you, I would try to negotiate out of it. $125 is surely worth an hour of your time to fight. First, demand to have proof that you agreed to pay this fee. Ask to speak with a manager. Talk about how upset you are. Say you will complain on their Twitter feed, Facebook, etc., or that you will tell your friends never to work with this company. Basically, cause enough of a fuss that it will be easier for them to just not charge you the fee.
« Last Edit: October 01, 2014, 04:44:30 PM by Beric01 »

oldtoyota

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Re: 401k account closing fee
« Reply #7 on: October 01, 2014, 04:45:46 PM »
I asked about the same thing on this board about six months ago. My fee to move the account is $50, and I thought *that* was outrageous!

Sorry you have to pay this. The 401K world is such a racket. They know they have reeled in because it's still a good option despite their charges.

Someone on this board told me that the fee pays for the paper work, the website, etc of the company rolling over. That said, $125 seems excessive to me.

oldtoyota

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Re: 401k account closing fee
« Reply #8 on: October 01, 2014, 04:48:27 PM »
PS: Also, I would be rolling over from a Vanguard fund to a Vanguard fund. Yep. It's that crazy. The custodian is some other company and they are the one that wants the fee. So, I will have to sell it all and then re-purchase...


hexdexorex

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Re: 401k account closing fee
« Reply #9 on: October 01, 2014, 05:25:05 PM »
Depending on the size of the account you can get some pretty good bonuses as well...

http://www.hustlermoneyblog.com/best-brokerage-bonuses/

I personally like Merrill. I know anything but Vanguard is heresy on this board but a lot of these for profit brokerages offer a ton of free trades if you have enough invested. Also almost all will cover the $125.