I rolled over my retirement accounts to gain more control over my savings, and it wasn't as hard as I'd thought

Bethany McCamish

Dec 6, 2019, 20:55 IST

I rolled over my retirement accounts to gain more control over my savings, and it wasn't as hard as I'd thought

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As long as you're prepared for some paperwork, an IRA rollover isn't so bad.

When I changed careers, I decided to roll over my retirement accounts to have more control over how they were invested.
Rolling over retirement funds just means moving them from one account to another, and I chose to move mine from a state pension fund to a traditional IRA at Vanguard.
It wasn't as complicated as I expected, even though I missed a box on one of my forms and had to resubmit them. The entire process took about nine weeks, and some of that was just waiting for the mail.
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When I transitioned from teaching to freelancing, I had a long list of financial to-do's. One of them was figuring out how to move my 457b and my teacher retirement pension (similar to a 401(k)) into a new account.

I could have left the funds where they were. However, the teacher pension account is set in stone and doesn't allow me to choose where the money goes, and I wanted to move the money to an account where I had choices for investments. Plus, once I left teaching, I couldn't make contributions.

Moving your money from one retirement fund to another is called a "rollover," and it's essentially a stack of paperwork that makes it clear where you want the money to go. I put off the rollover for a few months, while I happily focused on the other items on my list. Eventually, it was the only item that remained.

How to roll over your retirement accounts

I finally picked up the phone and got some paperwork started for the retirement rollover. Here is how I got it done and started having my money work for me again.

1. Call your existing plan provider

Both the 457b (also called the Deferred Compensation Program) and the teacher pension plan were housed with the Department of Retirement Systems (DRS) in Washington. The website is not user-friendly, so I gave them a call. The customer service representative emailed me two packets of paperwork, one for each account.

2. Open a new retirement account

Before I started the rollover paperwork, I needed an account number. This meant I needed to open a new retirement account. I chose to open a traditional IRA with Vanguard since it housed another investment account for me already.

Opening a new retirement account these days is simple. It can all be done online in a matter of minutes. I opened the account, put $100 in and picked a general money market fund as a placeholder. I knew I would pick my specific investments once my rollover was finished.

I chose the Traditional IRA because it was a pre-tax retirement account and the money I was rolling over was also in pre-tax accounts, so I wouldn't pay any taxes during the rollover. I can deduct my contributions and will pay taxes when I withdraw from the account years down the road.

3. Notify your new plan provider about the expected rollover

I found out that in order to roll over from one account to another, you need an open and active account and a letter from the investor. To get the letter, I completed an online form. At the end of the form, Vanguard gives you a letter to provide a"Letter of Acceptance" to give to your previous plan provider. Included in the letter is:

A request for action
Who the check should be made payable to
The retirement account number
Where to mail the check

I printed out two copies of this letter (one for each account I wanted to roll over) to include with the paperwork I received from the DRS, my original plan provider.

4. Complete the paperwork in detail

Here was the part of the process that really took some time. The packets were 13 pages each and full of questions.I filled it out to the best of my ability and crossed my fingers it was right. Then it went into the mail and out to DRS.

Within a few days, I received an email saying DRS, my original plan provider, had received the requests and started to process the rollover. One of the packets was done correctly and the rollover was processed right away. Easy.

In the packet of paperwork for my second account, I had forgotten to check one box. So I had to resubmit, and the second time it was accepted. This whole process only took two weeks. It was surprisingly fast for a government retirement agency.

5. Wait for the check to arrive (depending on your plan provider)

DRS informed me that it would only send the rollover check to the address on the account. This is not always the case, and some places will allow the check to go straight to the new plan provider (Vanguard, in my case).

I waited for the checks to arrive and confirmed the amounts, then I went to FedEx and sent the checks to Vanguard with tracking.

6. Monitor accounts and wait for the funds to appear

After the checks were in the mail, I tracked them (because I didn't want to lose track of thousands of dollars) and waited for them to deposit into the new Traditional IRA account at Vanguard. This took a few more weeks to complete.

7. Decide how you'll invest your new retirement account

Lastly, I didn't want to leave the money sitting in the account in a money market fund. I am a big fan of index funds, which offer multiple stocks in one bundle, so my portfolio is immediately diverse. Index funds track market indices like the S&P 500, and more often than not outperform mutual funds with fewer fees.

I chose my favorite index fund, VTSAX, and made sure the money was invested there. The minimum investment for this fund is $3,000, making it a perfect starter fund for anyone new to investing. My rollover was complete and my money was now working for me in the market.

The entire rollover process took a little over 2 months

It was important for me to stay vigilant about the accounts and where the money was during the rollover. The entire rollover process took two months and one week. The most challenging part was the paperwork I submitted to DRS. But I took it slow, read the fine print, and resubmitted one packet to get it right.

I am 25, soon to be 26 and I want my money to be growing. There is no better time to invest than when you have time on your side. This is why I put in the effort to get the accounts rolled over, so I can choose the index funds I want and still continue making monthly contributions. Now it's time to watch the returns roll in.

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