You have worked hard for your 401K and now that you’re leaving your current job for a better one, you need to take your 401K with you so you can roll it over into the 401K you’ll be starting at your new job. Unfortunately, this won’t be happening automatically, you need to write a formal letter to start the wheels in motion. Here are a few tips for writing the perfect 401K rollover request letter.
First off, the 401K rollover request should be addressed directly to the person who manages the 401K fund run by your current job. The point of the letter is that you want your current 401K account and the money in it rolled over into an IRA or some other retirement plan, or even another 401K at a new job. You will have to be very specific on what you want done with your cash, otherwise, it is possible that a very overworked fund manager may misinterpret your request. If you are planning on doing something a bit more untraditional with the money in your 401k account, you may need a completely different letter since this article will cover a simply rollover.
Start with your full name and your account number at the top of the letter. Don’t bother including your name anywhere in your letter without also including your account number, almost like you were dealing with the IRS. In the next section, give a reason why you are asking for your 401K to be rolled over. The most common reason is that you’re ending your employment with your current employer, but there are other reasons, as well, such as retirement or hardship.
Next, make sure you tell your fund manager if you want part of your 401K rolled over or if you want all of it. Again, unless you are doing this for hardship, it would naturally be all of it.
The next section of the letter is the most important. In this section you will tell the fund manager exactly what you want done with your money. If you are using a PDF as a template for your letter, you can see that you have several options, including cashing it out directly to yourself or rolling it over to an IRA account where your money can continue to earn interest. You can also choose a few government accounts, as well, and make sure you include any and all account numbers for any accounts that you ask that your 401K to rolled into.
The next part of the letter usually includes a section on how the money is to be delivered. Most account managers have bypassed paper checks and now use electronic distribution methods to cut down on paperwork.
The final part usually deals with taxes and how you want to pay what you owe.
As you can see can, a 401K rollover request isn’t nearly as complicated as it sounds if you go slowly and fill out each part correctly.