If you’ve turned in your two weeks and are on your way to a new hospital be sure to do one thing – Review your company benefits and rollover your retirement plan!
I know this is common knowledge. Everyone knows they should do it. That said, it is extremely easy to put it on the back burner and lose track of what’s going on with your retirement accounts. This can be a drag on your retirement portfolio and savings down the line. It is important to keep track of what’s going on. I’ll try to breakdown this process into a few simple steps to make it easier, less daunting, and maybe less miserable.
Find Your Old Statements
First things first, start by locating your old retirement plan(s) account statements. This can be done by:
- Statements sent by mail – Locate your old statements that have been sent by mail. Some employers will send you quarterly statements via snail mail or email.
- Login online – Login online to access statements and account information.
- Call HR – Call human resources to assist you.
Once you have your statements confirm from the plan administrator that the plan allows for a rollover. A couple notes:
- Defined benefit plans, or pension plans, can have various payout options. These need to be looked at to make sure you make the best decision.
- SIMPLE IRAs also have a 2 year rule where the account must be opened for 2 years before you rollover the funds into a traditional IRA. If the 2 year mark is not met then the rollover is considered an early distribution subject to income tax and a 25% penalty.
Open an IRA
If you don’t already have an IRA opened then you will need to do so. You can go online to various custodians, such as TD-Ameritrade or Fidelity, and have an account opened in a day or two. Be sure to open a Traditional IRA and not a Roth IRA. A Roth IRA is funded with after tax dollars, and will subject your retirement plan funds to be included in income, assuming the plan/account is pre-tax.
Call Your Old Employer’s Plan Administrator
Your account statement should have a phone number to contact regarding questions about your retirement plan. When you get someone on the phone state that you are no longer employed with the company and would like to rollover your retirement plan to an IRA. Typically they will ask:
- The representative will confirm your personal account information and address of record. The address of record is usually your home address but make sure it is correct.
- Which custodian will be receiving the funds/where the IRA is held, e.g. TD-Ameritrade or Fidelity.
- Account title and number of your IRA.
- Make sure this is a direct rollover, or trustee-to-trustee transfer, avoiding the 60-day rollover rules where the employer is required to withhold 20% for federal taxes. The check should say something like, “TD-Ameritrade Clearing FBO John Smith IRA #987654433.”
Once they have all of this information they will usually send the check to the address on record within 5 to 7 business days. Sometimes you can have it sent to your advisor’s office or straight to the custodian. Be sure you know where the check is going.
Check Your Mail
Monitor your mail regularly for your rollover check if it is coming to your home. Once you receive it, give it to your advisor or get it to your IRA custodian. This can be done by mail or by going to their branch. The funds will then be deposited into the IRA account. The next step is to invest your money. You have now successfully rolled over and consolidated your retirement accounts.
Healthcare professionals should also review their entire benefits package. Many hospitals have great benefits that can save you money and put you in a better financial position. This can include various types of insurance, HSA accounts, FSA accounts, 401(k) match, Roth 401(k) for contributions, and various investment options. Be sure you know these and are taking full advantage of these benefits.
If you’d like an objective second opinion about your finances, please contact Michael Shea, a CERTIFIED FINANCIAL PLANNER at Applied Capital. Email him at [email protected]
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