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Welcome to the 23rd edition of the Tech Financial Planning (TFP) newsletter.

The average person changes jobs 12 times in their lifetime.

This could mean 12 different retirement plans in 12 different places

In this newsletter we will discuss your options when you leave a job, the issue with 401k rollovers, and an awesome tool that can make it easier

TL;DR

When you leave a company, you have 4 options with your old retirement plan
The typical rollover process is a massive pain
Capitalize is a free tool that can make it a whole lot easier

Note: I have no relationship with Capitalize, nor am I compensated by them in any way. I think they have an awesome tool that solves a real need and I want more people to know about it.

What happens to your old 401k

When you leave a job, you have 4 options with your old retirement plan (think 401k or 403b).

Leave it where it is
Roll it over into your new employer’s plan
Roll it over to an IRA
Cash it out

Almost always you want to avoid number 4 because you will probably get crushed with taxes and penalties.

And I don’t typically recommend leaving it where it is because after a while, you will have a lot of accounts in a lot of places.

This makes it really tough to manage and keep track.

The majority of the time, it makes sense to roll it over, and most people choose to move it to their IRA (although there are times it’s advantageous to move it to your new employer plan).

At the end of the day, keeping accounts in one place is easier to manage.

The problem with 401k rollovers

401k rollovers are typically pretty tough.

There’s no common process - each 401k provider does it differently.

For example:

Guideline is great because you can do everything online.
Fidelity’s process is old school - you have to call in, then they mail a check to you, then you mail/deposit a check with your custodian.
Others (not to be named) would seemingly have you get 3 letters of reference, walk on coals, and go door to door selling knives before they let you move your money.

I’m convinced some of these companies make it as difficult as legally possible so that people don’t move their money.

It’s maddening.

Enter Capitalize

I am absolutely loving Capitalize for my clients.

I just came across them in the last 3 months and they are making 401k rollovers a whole lot easier.

Note: Capitalize is designed for rollovers to an IRA, not 401k. If you want to roll it over to your new 401k, they might not be your best option.

Here’s how it works.

Step 1 - locate your 401k

If you know where your 401k is, tell tell Capitalize where it is.

If you don’t, that’s ok too - they do an awesome job of helping you find where it is

Even if you don’t want to use their service, they have an awesome tool for finding where your old 401k could be.

Typically they can find where it’s at pretty quickly, but if not, their experts will help track it down.

This can be nice because if you have a 401k from 10 years ago, you might not have a whole lot of details and records.

Step 2 - Choose where you want it to go

From there, Capitalize helps you move your money into an IRA.

If you have already have one, it probably makes the most sense to move it there

If you don’t, Capitalize will help you pick one and open that account online.

Important Note - this is how Capitalize makes their money, and why this service is free for you (the user) to use.

“If you choose to open up an IRA with one of the providers on our platform then we may be compensated. This helps us keep the service free for users, but none of those providers is ever allowed to impact the content on our site.”

Step 3 - Moving the money from your 401k to your IRA

Capitalize steps in and does the rest.

Communicate with your old 401(k) provider to make sure your account is transferred correctly
Do any administrative work required
Keep you updated regularly

Putting It All Together

As someone who’s helped dozens of people roll over 401ks, Capitalize is a game changer.

It’s saving me and my clients countless hours and frustration.

One client said, “Highly recommend Capitalize though. They do everything for you and hold your hand the whole way.”

It pays to stay organized and have everything in one spot.

If you need help, Capitalize can be a great tool.

WHENEVER YOU’RE READY, THERE ARE 3 WAYS I CAN HELP YOU

1. Connect with me on LinkedIn, where I post every weekday (unless I’m on vacation). https://www.linkedin.com/in/marshalljoe/

2. Subscribe to the “Tech Financial Planning” newsletter to get equity comp and financial planning strategies in your inbox every Saturday. It’s free: TFP Newsletter

3. Want one on one help? Schedule your Get To Know meeting