5 mistakes not to make when transferring a 401k

Man with green shirt and glasses signing papers at desk

You may be worried about transferring your 401k—or you may be worried because all you know about a 401k is what you’ve learned from characters on sitcoms. Whatever level of expertise you have, it’s about to get a whole lot higher after you read our best tips for avoiding common mistakes when it comes to protecting your future.

Don’t fake it ‘til you make it

If you’re at a wedding and can’t remember a cousin’s name, it is perfectly acceptable to refer to them in vague terms until your spouse can whisper the name to you. But when it comes to your financial security, you’ll want to understand every detail. If you’re not sure about how your 401k works through your current job, or even if you’re not sure that you are currently enrolled in a 401k, now is the time to ask! Better late than never, right?

Don’t be afraid to ask a lot of questions

Yes, you may feel like the world’s most annoying gnat when you sit down with your HR rep and discuss your 401k options and ask question after question. But asking questions is how you learn— and in your retirement years, you will be glad that you risked being banned from the HR hallway forever to ask just one more question and increase your financial knowledge.

Don’t forget to consult an expert

Hiring an accountant or tax professional isn’t always necessary, but it certainly helps you navigate your options and decide which path is the best one to take to secure your comfortable retirement. If you don’t want to use an accountant for all your financial needs, consider consulting one to help you transfer your 401k and guide you through the necessary steps.

Don’t skip the details

Did you know that you have 60 days to finalize your 401k transfer into a new account? That is just one example of the many rules and regulations that come with managing and transferring a 401k. It is crucial that you know and understand the necessary steps in order to avoid penalties—like losing over 50% of your 401k. Even if you are consulting an expert, do your own research to ensure that every last detail is covered.

Don’t think you can’t learn more

Once you have successfully transferred your 401k, you deserve a pat on the back. However, that doesn’t mean you’re done managing this account! It’s important to stay up to date on trends and recommendations to keep your funds secure, along with making regular checks to ensure that the amount you think you have matches the official record. You don’t have to become an expert yourself, but keeping up with these small details can make a big difference.

A few more suggestions for 401k success:

  • Take a class or look for webinars on the best ways to maximize your 401k.
  • Speak with trusted family members or friends to find out tips and tricks they have learned through maintaining their own 401k.
  • Ask your HR rep if there is anything additional they would recommend to facilitate a successful transfer.
  • Remember that all final decisions are up to you—if a recommended step does not seem like a good fit, even after a lot of research, you don’t have to take it.
  • Join a Facebook group, set up a Google alert, or find a Twitter account that has the expertise you need to allow you to stay current on any relevant information.

Your future is important—which means your 401k is a priority for you. Take the necessary time to ensure that you are doing everything you can to make your 401k transfer a complete success. And, remember: it’s always the right time to consult an expert!

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