Rolling over your 401K is a complicated process so we brought in a few experts that have helped our clients rollover hundreds of 401K’s. Understanding the unexpected roadblocks surrounding a 401K rollover is a vital step in making the best decisions with your money. So listen to this episode to hear steps of how to properly rollover a 401K quickly and efficiently.
Maybe you just left a job or maybe you need an in-service rollover but you are at the point that you need to rollover your 401K. So how do you do it? Unfortunately, there isn’t only one way. It depends on the type of account you have and where you want the money to go. If you have a brokerage account linked to your 401K it will make the task a bit easier. Brokerage links give you the opportunity to invest in funds at a lower cost. If you have just quit or left your job you need to ensure that all of your contributions and your employer contributions have settled before you move your 401K or you will have to redo the process again once it does settle.
401K rollover paperwork can be quite daunting. Nowadays there are many forms that you can fill out online, but there are still actual papers that must be completed in person. The paperwork can be a bit confusing and overwhelming, but it is important to fill everything out correctly. Even if you mis-check just one box they won’t process your rollover and you’ll have to start the process all over again. Oftentimes you may need your spouse to sign, a notary to sign, and you’ll also need your plan administrator to sign. Sometimes finding the plan administrator can be tricky. If you know the right people to call the paperwork really doesn’t take much time. It can take a few days or even a few weeks to complete the paperwork. If you feel daunted by all the paperwork you might want to consider hiring a professional to help you out.
It's important to reduce your risk of being out of the market. You want to ensure that your money is out of the market for as little time as possible. Pay careful attention to the timing and ensure that you have all your ducks in a row first. This means that you need to have the accounts where the money is going set up beforehand. If you have a brokerage link you can reduce the time out of the market. You’ll also want to double check where your allocations are in case you need to change those settings. There are many steps involved in moving your 401K and you may have to contact different service representatives to get all of your questions answered.
Having your money pulled out of the market for any amount of time can be costly. If there is a way to expedite getting your check you’ll want to do it. Think about it, if you have your money out of the market and it goes up a few points you’ll be losing out trying to get it all back in. Getting the money back in as quickly as possible is important. Having a brokerage account linked to your 401K can give you the opportunity to invest in funds at a lower cost. Listen to the experts, Heather and Angela, to help you understand how to rollover a 401K to make your transition run as smoothly as possible.
What does your financial future look like? Do you feel it is secure and well planned out or are you just winging it? Winging it is a great idea for a Sunday afternoon drive or deciding to what to eat for dinner, but winging your financial future is a dangerous decision that will put your future stability at stake. Learn why people decide to wing it and what you should be doing instead, on this episode of the Financial Symmetry show.
Short video recap here: https://www.youtube.com/watch?v=UCFFhFpRpVc
We love numbers on this show. They help to illustrate the point we are trying to make and sometimes they are truly shocking.
Why do people do this to themselves? Why do they choose to leave their financial future up to chance? I think there are 3 main reasons.
Are you overconfident about your ability to handle your finances? 57% of adults feel more confident today than they felt 3 years ago about their finances. Do you feel a bit overconfident due to the recent success of the financial markets? Overconfidence is a villain when it comes to good decision making. Usually the more intelligent you are the more overconfident you are. Mark Twain had a powerful quote that sums up overconfidence well, “It ain’t what you don’t know that gets you in trouble. It’s what you know for sure that just ain’t so.” A great way to ensure that you aren’t being too overconfident in your financial decisions is to hire a financial advisor. Having an objective 3rd party view of things can really help you keep things in perspective.
The internet is starting to play a major role in creating greater confirmation bias. People tend to follow their own views and they will seek out news that confirms what they already think about something. If someone has a negative worldview and they read an article about how the market will be crashing they will nod their heads and think, yes this is the truth. To combat confirmation bias think of the acronym WRAP from the book Decisive by Chip and Dan Heath.
People think they know more than they do about how the future will unfold. More often than not, the future will surprise us. Our conclusions about the future are often based on our emotions. They can also be affected by recency bias. Recency bias is a bias based on the fact that people tend to think that what happened to them recently will happen to them in the future. This can be seen frequently with finances for instance, if you have received a big bonus, or especially when it comes to stocks. Are you allowing recency bias to affect your financial future?