Author Topic: Previous Employer Asking to Rollover 401K by 3/31 - Need Advice  (Read 842 times)

minority_finance_mo

  • Pencil Stache
  • ****
  • Posts: 758
    • Minority Finance
Hi,

I recently received a letter from a former employer (post-marked 3/20) that I needed to roll over my pre-tax 401K I had when I worked there to a private account by 3/31 because I am no longer employed with them. This is an employer from over three years ago.

I called Fidelity (the firm managing this 401K) and they weren't aware of this letter, but listed my options as:
1. Transferring funds to my new employer's 401K (could take up to 14 business days)
2. Transfer funds to a rollover IRA within fidelity (could take 3-5 business days)

Apparently, if I don't take initiate action by the 31st, the funds will automatically be moved to a money market account managed by a third party.

In either scenario, I believe Fidelity would first sell the holdings on the account and then transfer over the cash value. I'm afraid to have money out of the market for any period of time given the current volatility. Is anyone aware of options for me to not have to sell my holdings in the transfer? (Especially if I go w/ option #2?)

I've tried contacting my employer, but they're a large multi-national with 30K+ employees, and I have had no success reaching a real person. Anyone I knew at the company has also left by this point.
« Last Edit: March 27, 2020, 01:38:07 PM by Hey It's Me »

Kierun

  • Pencil Stache
  • ****
  • Posts: 581
  • Location: HI
Re: Previous Employer Asking to Rollover 401K by 3/31 - Need Advice
« Reply #1 on: March 27, 2020, 01:17:01 PM »
I believe what you're asking about is a transfer in-kind or in-kind transfer, which doesn't involve a sale of holdings.

minority_finance_mo

  • Pencil Stache
  • ****
  • Posts: 758
    • Minority Finance
Re: Previous Employer Asking to Rollover 401K by 3/31 - Need Advice
« Reply #2 on: March 27, 2020, 01:37:50 PM »
I believe what you're asking about is a transfer in-kind or in-kind transfer, which doesn't involve a sale of holdings.

@Kierun, yes that would be the ideal case! The Fidelity rep mentioned that there is sometimes this option, though because of the type of fund I'm invested in (VTTSX), her system was showing we'd have to liquidate on transfer. I'm unsure of the specifics as to why... but it seems I may be out of luck here.

If that is the case, my thought was to initiate the transfer on Monday to avoid any market surprises from the news over the weekend and hope for minimal volatility during the 3-5 day transfer period... Not a great situation to be in during these times.

terran

  • Magnum Stache
  • ******
  • Posts: 3480
Re: Previous Employer Asking to Rollover 401K by 3/31 - Need Advice
« Reply #3 on: March 27, 2020, 03:07:40 PM »
Did you ask if they could speed up the transfer if you went Fidelity 401(k) to Fidelity IRA? What about if they could transfer in kind with any of the other investment options available in your 401(k)?

plog

  • Stubble
  • **
  • Posts: 244
Re: Previous Employer Asking to Rollover 401K by 3/31 - Need Advice
« Reply #4 on: March 27, 2020, 03:58:02 PM »
Quote
I'm afraid to have money out of the market for any period of time...

First, you're a breath of fresh air from all the panickers I've been reading posts from on forums in the last month. Good for you.

Last year I left a job which had their 401k thru Fidelity.  I called Fidelity up and the phone call took 15 minutes to get it to an IRA with them.  I really want to say that I was never out of the market with that transaction, but it might have been 1 day.


Systems101

  • Stubble
  • **
  • Posts: 201
Re: Previous Employer Asking to Rollover 401K by 3/31 - Need Advice
« Reply #5 on: March 27, 2020, 05:54:40 PM »
The Fidelity rep mentioned that there is sometimes this option, though because of the type of fund I'm invested in (VTTSX), her system was showing we'd have to liquidate on transfer. I'm unsure of the specifics as to why... but it seems I may be out of luck here.

Which simply leads to the question of whether you could convert to a mix of VSTAX, bond fund, etc. (that is available in the 401k) and then do the in-kind and then transfer to something else you want (since the universe of funds is available in an IRA)... Buying/selling between mutual funds at the end of a day doesn't remove you from the market, and since these are retirement accounts, no capital gains to worry about.  I'd ask Fidelity what funds exist in the 401k that CAN be transferred in-kind.

Proud Foot

  • Handlebar Stache
  • *****
  • Posts: 1151
Re: Previous Employer Asking to Rollover 401K by 3/31 - Need Advice
« Reply #6 on: March 31, 2020, 01:57:04 PM »
The Fidelity rep mentioned that there is sometimes this option, though because of the type of fund I'm invested in (VTTSX), her system was showing we'd have to liquidate on transfer. I'm unsure of the specifics as to why... but it seems I may be out of luck here.

My first thought was that this was an institutional level investment but after looking it up it is not. My next would be to ask about how the retirement plan is structured to hold the investments. My work plan is with John Hancock one of my investments is the Vanguard Mid-Cap Growth ETF (VOT). However I do not own shares of VOT directly, I own shares of a "Trust" account that is 100% invested in VOT. How they account for it and the additional fees leads my shares and share price to not be a direct 1:1 to VOT. Because it is a proprietary fund to my 401k plan and JH I would not be able to do a direct rollover of the shares I own. This may also be the same case for you.

minority_finance_mo

  • Pencil Stache
  • ****
  • Posts: 758
    • Minority Finance
Re: Previous Employer Asking to Rollover 401K by 3/31 - Need Advice
« Reply #7 on: April 02, 2020, 06:52:28 AM »
Thanks everyone who commented. In the end, the only option that made sense given the timeline was divesting and transferring money into the rollover IRA. Good news is the transaction took place overnight, and I really only lost out on 24 hours of trading, not the 3-5 business days they had originally quoted. Decent end to an otherwise stressful event. Thanks all for the advice.