401(k) advice

[SkyHog]

Ok,

Working at Comcast, I had a pretty decent 401(k) I was participating in. When I left, HR at Comcast told me I'd get a letter explaining how to roll the 401(k) into an IRA or into another 401(k), but I had to act within 90 days. I didn't receive anything, and a month later, I called Comcast, and they told me to call Fidelity to get the information. I called Fidelity, and they said I had to talk to Comcast HR. I tried again, and they said that I needed to call Fidelity, and it went back and forth.

The 90 day mark came and went, and I was unable to get either company to help me with the information I needed. I called Fidelity a few more times, and was never able to get a straight answer about what to do.

Its now been over 6 months, and T-Mobile is offering a 401(k) for me. I want to roll over my old 401(k), but I suspect I cannot do this because either Comcast (most likely) or Fidelity screwed me over. What happens to the money that was in the 401(k), and is there any way I can still get the money to roll into my new 401(k)?

 

[alaskaflyer]

Well, that's the first time I've heard of a 90 day deadline. I suspect this is a Comcast policy regarding accounts that are under a certain dollar amount that they force you to withdraw upon leaving (see below.)

The only thing I know about from an IRS perspective is once you actually RECEIVE the funds from your old plan (which you haven't yet) you have 60 days to roll the total gross amount into your new tax-deferred plan, else you accrue the tax liabilities on the amount. And if the jackasses at Comcast or the plan administrator withhold 20% for taxes when they send you the check then you have to make up the 20% out of your own funds, so that the total gross $ amount from your old fund goes into your new plan, to avoid any tax liability (ask me how I know - actually, don't get me started ) You'll then get the 20% back (theoretically) as a tax refund in a year. To avoid this you MUST tell them that you plan on rolling it over, and do a direct rollover.

If it is over $5000 you can leave it where it is to earn interest until you retire and simply start a new plan with T-Mobile, your choice. Under $5K I believe you have to take it with you.

 

[SkyHog]

Well, that's the first time I've heard of a 90 day deadline. I suspect this is a Comcast policy regarding accounts that are under a certain dollar amount that they force you to withdraw upon leaving (see below.)

The only thing I know about from an IRS perspective is once you actually receive the funds from your old plan, you have 60 days to roll the total gross amount into your new tax-deferred plan, else you accrue the tax liabilities on the amount. And if the jackasses at Comcast or the plan administrator withhold 20% for taxes when they send you the check then you have to make up the 20% out of your own funds, so that the total gross $ amount from your old fund goes into your new plan, to avoid any tax liability (ask me how I know - actually, don't get me started ) You'll then get the 20% back (theoretically) as a tax refund in a year. To avoid this you MUST tell them that you plan on rolling it over, and do a direct rollover.

If it is over $5000 you can leave it where it is to earn interest and simply start a new plan with T-Mobile, your choice. Under $5K I believe you have to take it with you.

Well, since its such a small amount, i don't mind revealing that it is something like $5012. So that means I have the choice.....

I'd rather move it over, if I can....what do you think I should do then, just get the check sent to T-Mobile?

 

[alaskaflyer]

To answer your question specifically, YOUR contributions are still there, they can't touch them, and they will continue to earn interest (or whatever income you have them invested in) and be tax-deferred until something else happens. The status of the company's contributions (if there were any) depends on whether you vested or not, too complicated of a question for me to answer based on the information above.

They should have sent you a packet - you've been gone a while, yes? Maybe the 90 days was the waiting period before they send you your disbursement packet?

 

[alaskaflyer]

Anyway, for a direct rollover you have to set up your new 401K first, then get the routing and account numbers for the forms for your old employer. Fidelity will either electronically transfer the funds or send you a check payable to the new fund manager. If you are lucky (or maybe not) T-Mobile will be using Fidelity too, which makes it even easier.

 

[SkyHog]

To answer your question specifically, YOUR contributions are still there, they can't touch them, and they will continue to earn interest (or whatever income you have them invested in) and be tax-deferred until something else happens. The status of the company's contributions (if there were any) depends on whether you vested or not, too complicated of a question for me to answer based on the information above.

They should have sent you a packet - you've been gone a while, yes? Maybe the 90 days was the waiting period before they send you your disbursement packet?

The packet was the item in question. Comcast said Fidelity would mail it, Fidelity said Comcast would mail it, and I had to excersize within 90 days (my memory may be failing, and it might have been 60 days). Unfortunately, I suck at retirement stuff.

Comcast did match my contributions 100% (I made sure I only contributed up to their match amount of each check). I left Comcast on December 27th. Its been well over 6 months (maybe 7 now). If I could get a straight answer out of either Fidelity or Comcast, I'd be a lot more clear.

FWIW, the HR lady at T-Mobile said that the money from my old 401(k) would probably not be able to be rolled over and that I would have to leave it there and let it continue to earn intrest. I don't really mind doing this, but the problem is that I'm about 75% sure that I had a 401(k) with AOL too, but damned if I can remember the company or how much money I had in it, so there's really no way for me to find the money. That's why I'd rather just keep it all in one neat package at T-Mobile.

Sigh. Retirement stuff confuses me. Wish it was like the old days where a company just said "When you retire, we'll pay you x% of your pay until you die."

 

[alaskaflyer]

Sigh. Retirement stuff confuses me. Wish it was like the old days where a company just said "When you retire, we'll pay you x% of your pay until you die."

LOL! Not even the guv'ment does that anymore. My service pension will be a small portion of my overall retirement, most will come from the government version of a 401K just like almost everyone else. And the IRA I have with the money I get from working in my Dad's bookkeeping business

 

[SkyHog]

Anyway, for a direct rollover you have to set up your new 401K first, then get the routing and account numbers for the forms for your old employer. Fidelity will either electronically transfer the funds or send you a check payable to the new fund manager. If you are lucky (or maybe not) T-Mobile will be using Fidelity too, which makes it even easier.

No such luck, T-Mobile uses T-Rowe Price or something like that.

Thanks for the info. I guess I'll get the new 401(k) setup and then roll from there. I appreciate it.

LOL! Not even the guv'ment does that anymore. My service pension will be a small portion of my overall retirement, most will come from the government version of a 401K just like almost everyone else.

Sigh. I hear ya. I blame the corporate jerks that decided they had to put golden parachutes (golden handshake...is there a difference?) into their contacts that wound up screwing everyone else.

 

[Everskyward]

Wish it was like the old days where a company just said "When you retire, we'll pay you x% of your pay until you die."

Not me. Much better to have more control over it yourself. You never know what's going to happen to your company years down the road. I always knew I wouldn't work in any one place long enough to get a pension anyway.

 

[rpadula]

Nick,

Set up a Rollover IRA account with a discount brokerage instead of rolling into the T-Mobile plan. I use TD Ameritrade. You will have so many more choices to invest your money than a few hand-picked, high fee mutual funds that benefit the 401(k) consultant more than they do you.

Once that's set up, the trick is to have your old 401(k) issue a rollover check. It will be made out like "TD Ameritrade Rollover in benefit of Nick Brennan." That way you can't deposit it anywhere else and you will avoid potential pentalties/taxes. Send that in and you're done. The trick will be finding the right contact to actually do this for you. This should be with the plan administrator (Fidelity).

Do you have online access to that 401(k) account? There may be better contact/transfer info there.

-Rich

 

[alaskaflyer]

FWIW, the HR lady at T-Mobile said that the money from my old 401(k) would probably not be able to be rolled over and that I would have to leave it there and let it continue to earn intrest.

I just caught this. Not all company 401K plans allow you to roll funds into them, so if you choose not to follow Rich's excellent advice I would flesh this out with her, to see exactly what she means. T-Mobile's policy may be that you can't roll into their plan.

 

[KennyFlys]

I had a 401(k) with a company which was managed by Fidelity. I didn't roll it over until some four years later. It was strictly Fidelity who helped me.

I'd suggest going up the chain at Fidelity. If necessary, go into one of their offices. I'm a peon investor by comparison to most but they have still been great toward me.

 

[wsuffa]

I took mine out of my former employer's grubby little hands (managed by Fidelity) and put it into a rollover IRA. I've never regretted the decision. I used ETrade for the rollover - Rich's suggestion of TDAmeritrade is fine, too.

I've done it twice, actually. And when I have exceedingly low income for a year, I took advantage of the Roth conversion rules and converted one of the accounts to a Roth.

I'm not aware of any 90 day rule as long as you roll it over. Having said that, most employers do their best to keep your funds in their 401K program because it lowers their cost. And in my experience, Fidelity tries very, very hard to keep your funds with them - I nearly had to threaten them when I moved my funds out - their phone rep sent me to the "save" desk. That torqued me off, it was a SUBSTANTIAL amount of money.

There is no advantage to you to leave it there, and there may be disadvantages. The only disadvantage would be if you took it out as cash as opposed to rolling it over.

 

[Richard]

Nick, it crushes me to see you overburdened with this "retirement stuff". Just send me the money. I'm looking out for you, kid.

 

[Skip Miller]

It is time to lose the telephone and start writing. Send the ComCast HR type a certified letter Return Receipt Requested and ask for the info packet as soon as possible. If you know an atty ask him/her if you can include a cc: [atty's name] on your letter.

Make the small people at ComCast know you aren't going away, but be nice at this stage.

-Skip

 

[Matthew]

I've used rollover IRAs - I took previous 401(k)s and rolled them in. You get to roll-your-own that way, and also use your new 401(k). As others have said, I've never heard of a deadline before, I always thought you could leave it in your previous 401(k), you just wouldn't be able to contribute anymore.

Talk to wherever you want the money to end up, and give them the phone numbers to call to make the rollover happen. That may help.

Just make sure it really is a 'rollover'. The instant that check touches YOUR hands (even remotely), it's considered an early withdrawal and you'll pay all kinds of taxes and penalties.

 

[KennyFlys]

Nick,

Just a thought... something you might consider when you do a rollover to a conventional IRA is then converting it to a Roth IRA. If it's a few thousand or less, it would be worth the small tax bite to then let that money grow tax free. The folks at Fidelity can explain it more. Leaving it as a conventional IRA will make it taxable at retirement. A conversion avoids that at a much cheaper rate right now.

Tis a thought to consider.

 

[wsuffa]

Nick,

Just a thought... something you might consider when you do a rollover to a conventional IRA is then converting it to a Roth IRA. If it's a few thousand or less, it would be worth the small tax bite to then let that money grow tax free. The folks at Fidelity can explain it more. Leaving it as a conventional IRA will make it taxable at retirement. A conversion avoids that at a much cheaper rate right now.

Tis a thought to consider.

Just a comment: this must be done as a 2-step process. Step 1: create the rollover IRA. Step 2: convert it to a Roth. There is no provision in the tax code to roll directly into a Roth, but since a rollover IRA is treated as a regular IRA for this purpose, you can convert a rollover IRA to a Roth.

One other point: if you do decide on a rollover IRA, my accountant strongly suggested that I keep it separate from any other IRAs I have. By not "contaminating" the funds, I had more flexibility in the future.

 

[SkyHog]

Thanks for the advice, everyone. I'd rather not go for the ol' IRA at this point, because again, I've lost money out there somewhere before by having multiple accounts, so I'd rather just stick to one, consolidated 401(k).

The 401(k) is good from T-Mobile because they match (only up to 5% vs. Comcast's 10%, but still, its a match). And I have pretty good control over the stocks. I'll look into this more in the next few days and weeks and figure out how I can do this.

 

[Ghery]

Nick,

The value of a roll-over IRA is that you can roll multiple 401-ks into it. The one from Comcast would be a start. If you ever figure out where your AOL 401-k is stashed, roll it into the same account. When you leave T-Mobile, roll it into the same IRA. Much simpler that way.

 

[Matthew]

Nick,

The value of a roll-over IRA is that you can roll multiple 401-ks into it. The one from Comcast would be a start. If you ever figure out where your AOL 401-k is stashed, roll it into the same account. When you leave T-Mobile, roll it into the same IRA. Much simpler that way.

Yep, that's a good point. My wife and I have done that with all our previous 401ks. It does keep things tidy. You'll then avoid that multiple account problem you mentioned, although you will have two - the IRA and your current 401k. You can set up that IRA in just about any kind of fund, or combination of funds, you want - individual stocks, mutual funds, whatever - just like your 401k.

 

[kevin47881]

Nick, when I left my prior companies I did a direct roll over with a broker I have been using for years. All I needed to do was ask him to open an additional account, provide me the numbers and put in a written request with the prior employer requesting the roll over. The entire process took about 45 days.

While I appreciate you wanting to keep things simple, using T-Mobile's 401(k) selections SEVERELY limits you fund options. I imagine TM is offering something like a dozen options when there are literally thousands available.

Good luck.

 

[silver-eagle]

The key to the retirement 401k is that your current address is on file with the company managing it. That is, if Fidelity has your current address and can contact you with details of your plan, you're okay. Same with any previous 401k. Keep the contact information up to date, find out about accessing it online, and keep all information current.
I still have my retirement package with a company I left 20 years ago. Since it is a good plan, I'm happy to leave it there. It's managing the change of addresses that's the pain. I kept one simply because it was Fidelity Magellen which was doing 30% at the time.