Ask Terry Questions When to Transfer a 401k

When to Transfer a 401k

By Terry Savage on September 12, 2015 | Financial Planning / Retirement

I need a little advice. I lost my job in Mid-August and have a 401k that I need to rollover. I have rollover accounts at fidelity that I want to use. The problem is the 401k has lost a lot of money (150K) since I lost my job I would have to liquidate my 401k to have the funds transferred. I know you do not have a crystal ball, but I am having a hard time locking in those losses so that I can transfer the money. I was told by the 401k administrator that they will send a check to fidelity and it takes 4 weeks. I could wait until the markets recovers before I start this process. What do you think?

Terry Says:  You — and I — will NEVER know what is the best time to invest or sell.  And, by definition, the money in your 40l(k) is money you won’t be using for a long time.   Don’t look back!  Unless there is some very special or unique fund in your current 40l(k) — and assuming you don’t have a deadline for moving the money — just do the rollover, liquidating the old funds — and move the money directly to Fidelity.  They have lots of great funds, and if you show them how you were invested before the move — they can surely create a similar portfolio.

But wait — on re-reading your question, I am surprised to hear that your 40l(k) administrator says the process will take four weeks! Ask Fidelity to contact them for you, and have the administrator wire transfer the funds immediately to your rollover account.  And the gap should be only a few days at most! You are entitled to access to your funds, and I’m sure that your Fidelity rep will so inform your current 40l(kl) plan administrator — A threat to report them to the Department of Labor should go a long way.  Please do let me know if this plan administrator does not cooperate!

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