Sunday, April 3, 2011

Fiscal fitness: Rolling over an IRA

Like many people who've been out of college for a while, I've worked for a number of employers. Naturally (since I preach the gospel of saving for retirement!) I've enrolled in each employer's retirement plan as soon as I've been eligible, and always contribute whatever it takes to get the full employer match.

So yay me and all, but the down side of this is that I've had retirement accounts scattered all over the place. I always kept track of them (..sorta) but I knew it was a bad idea. It's easy to lose track of account paperwork; it's a drag to have to update your address with multiple organizations; it's hard to figure out your asset allocation if your money is held in different funds; you may be paying more in fees than if you consolidated! 

Once upon a time I had rolled over one account, but it was under duress: in 2001 I was laid off (for the second year in a row, thank you high tech) and my ex-employer told me I had to do something with that retirement account. I rolled it into a Roth IRA at Vanguard, which was a good call, but I ignored the rest of my accounts, since no one seemed to mind if I left them intact.

Time flew, as it does, and at the beginning of 2010 I still had three accounts to deal with:
 - the software company that laid me off in 2000 - that account was still maintained by my ex-employer, who mailed me quarterly investment reports
 - the state of Oregon's public employee retirement system, from my library gig that I left in 2006
 - the other retirement savings account from that same library job - if I recall correctly you can't contribute additional funds to the PERS account so you can contribute to a 403b (aka a 401k for public employees) instead

So it only took a full decade, but I did  finally begin to deal with those accounts. I contacted my former employer and got the paperwork to roll over the funds from 2000. Of course we'd had a couple of stock market crashes since then - it had fluctuated wildly over the years and still wasn't at its highest when I did the paperwork. I have to say it felt good to finally cut the cord with that employer!

I also closed the PERS account, but that was a little more complicated, involving two checks, one of which got lost, two 1099Rs (which confused me greatly), and one call to American Public Media's Marketplace Money show! The call was to help me understand which tax year I should claim the disbursement in, since I asked for it in 2010 but actually deposited the check in 2011 - the answer is: 2010! he said I could ignore it if I get a 1099-R next year. More likely I'll have a heart attack but I'll let that be Future Beth's problem.

Attentive readers may note that I still have to deal with the third account listed in the bullet points above. It's true, I do, and I will. Soon. I swear.

So, for my future reference - and yours! - here are the steps to roll over a retirement plan:
 - Decide where you want the funds to go, and open an account with that institution.
 - Contact the plan and tell them  you want to roll over your account into an IRA at the other organization. Since you will tell them it is a rollover, they will issue it to your chosen bank/investment house for your benefit. (If you give them the new account number that makes it all the smoother.)
 - If they mail the check to you, do not file it!!! (personal experience is speaking here!) - mail it to your chosen bank/investment house.Two of my checks went straight to Vanguard, so chances are yours will be mailed for you as well. Try to pay attention to make sure the money gets there!
 - Come tax time, look for a form 1099-R to come in your name. It will list the payer, the amount you rolled over, and should have the distribution code G which indicates it was a rollover and also indicates that you would have been unable to cash the check.
 - When you fill out your taxes you'll have to use a 1040 to declare the 1099-R information, but it's not a taxable event - it won't change anything about what you owe.

My resolution for 2011 is to get that last account rolled over. One of my little quirks is that I hate to use the phone so I tried requesting a rollover packet from their site, but I got the wrong thing. I'll try again today though.. here's hoping I have better success!


  1. Thanks Beth, I was just talking about this with my mom last night because I still have PERS account hanging around too. Now I have the steps for how to get it done.

  2. You might think having retirement stashes from a few employers makes things complicated. Imagine managing tax-sheltered savings across FOUR COUNTRIES...

  3. Ooooh Joe. You're pretty much doomed aren't you? Is there any sane way to handle that????

  4. Woo! Very useful post.

    I still need to get on the ball with getting ING to release my money to Fidelity. These are 403(b) accounts with the same employer. I asked once nicely (they switched over my husband's), and tried again after that failed, sending everything again and talking to them on the phone, but no dice. Then school got well underway and it has been several months.