Rolling over a 401(k) shouldn’t be a big headache, but for many people it is—and sheer dread (or lack of information) can lead them to avoid rollovers altogether. And if your employees have had more than one job in the past few years, there’s a good chance that they have one or two old 401(k) accounts floating around.
It doesn’t help that former employers may put up roadblocks in front of former employees looking to complete a 401(k) rollover, according to a 2013 Government Accounting Office (GAO) report.
The GAO also found that a former employer might not explain all the possible alternatives, might mislead former employees about account charges, or encourage them to roll their 401(k) over to an Individual Retirement Account (IRA) within the same institution, even if it’s not the best option for them.
Betterment offers a better solution for your employees. By rolling over an old 401(k) to Betterment, they can experience a fast and easy rollover process. Afterward, they’ll benefit from the same automated investment engine that powers the Betterment 401(k) plan, which helps keep them on track to meet their goals, offering transparent, low-cost investment advice, and using tax-efficient tools to maximize their money’s growth and returns.
Your employees deserve more than just a “good enough” 401(k) plan. Give them the Betterment 401(k).
If your employees have questions about their old 401(k) plans and what to do with them, the guide we’ve provided below can light the way to a faster and easier rollover experience.
How to Roll Over Your 401(k) to Betterment
Betterment does not charge a fee for rolling over your old 401(k).
The first step is to create a Betterment account if you don’t already have one through your Betterment 401(k) plan. Then you can start your rollover online by clicking “Start Rollover” at the top right-hand side of your Summary tab. We’ll send you a personalized email with all the steps, including how to transfer your 401(k) funds to Betterment.
You’ll want to contact your 401(k) provider and let them know that you’re rolling over your funds to Betterment.
Your provider will then release your 401(k) funds by issuing a check—either directly to us, or sent to you, which you can then forward to us at the address here and also provided in your email. The same fund transfer process applies for any other employer-sponsored plan.
Apples to Apples
Remember that a traditional, tax-deferred 401(k) should be rolled over to a traditional IRA (otherwise your rollover funds may be subject to taxes). Though rarer, funds from a Roth 401(k), can be rolled over to a Roth IRA. In cases where your employer has transitioned to a Betterment 401(k) plan but still has an actively administered plan with the former 401(k) provider, you can roll over funds from that account into your Betterment Traditional 401(k) or Roth 401(k) respectively.
If you’re not sure what type of retirement account you have, and which rollover account to set up, our guide makes it really easy and will help you find out your account type.
Knowing your account type is important. For example, if you try to roll over a 401(k) to a Roth IRA, it’s considered a Roth conversion and you’ll likely owe taxes on that transfer of funds.
(If you’re wondering about how to roll over an existing IRA to Betterment, you can do that with us as well.)
Ask About Fees
While Betterment does not charge to initiate a Betterment IRA rollover, your 401(k) provider may charge you for closing your account. As you’re starting a partial rollover of your 401(k) funds, ask your current plan provider whether you will incur any fees.
Once your Betterment rollover account is setup, you’ll begin to benefit from some of the lowest investing fees in the industry.
Whatever you do, don’t procrastinate or let your investments sit idly by with your company’s 401(k) provider. Roll your 401(k) over to Betterment now.
When deciding whether to roll over a retirement account, you should carefully consider your personal situation and preferences. The information on this page is being provided for general informational purposes and is not intended to be an individualized recommendation that you take any particular action.
Factors that you should consider in evaluating a potential rollover include: available investment options, fees and expenses, services, withdrawal penalties, protections from creditors and legal judgments, required minimum distributions, and treatment of employer stock. Before deciding to roll over, you should research the details of your current retirement account and consult tax and other advisors with any questions about your personal situation.