FAQ
Q: What if I don’t see my provider listed?
A: Unfortunately, not all providers support mobile check deposits for 401(k) rollovers. If your provider does not allow for mobile deposit, you will have to mail the check or deposit it in person at a local branch.
If you initiated your rollover with Capitalize, we will send you a prepaid envelope with a tracking code to mail in your 401(k) rollover check. If you didn’t receive a pre-paid envelope, simply contact our support team and they will send you a new one!
Q: Do I need to endorse the back of the check?
A: It’s best practice to sign the back of your check and note “For mobile deposit only at” plus the destination provider name underneath your signature in the endorsement area.
Q: I’m having issues with the mobile deposit camera.
A: Be sure to take a clear picture of the check on a dark, flat surface, in a room with good lighting.
If you are unable to submit the check deposit through the mobile app, you can also mail the check or deposit in person at a local branch.
Q: I submitted the mobile deposit, how long does it take for the funds to show up in my account?
A: It may take a few days to process your request, so keep your check safe for about a week until you’ve confirmed your check has been successfully deposited.
Q: What do I do with the check once the deposit is complete?
A: After completing your mobile deposit, it’s good practice to write “Mobile deposit” and the deposit date on the front of your check. Store it in a safe place for 5 days after the check clears to confirm there were no issues, and then destroy it.
Q: What is a 401(k) rollover check?
A: A 401(k) rollover check refers to the distribution of funds from a 401(k) retirement account that is directly payable to an individual. It allows you to transfer the money (via distribution check) from your previous employer’s 401(k) plan into another qualified retirement account, such as an Individual Retirement Account (rollover IRA) or a new employer’s 401(k) plan.
Q: How do I initiate a 401(k) rollover check?
A: To initiate a 401(k) rollover check, you typically need to contact your former employer’s retirement plan administrator or your current retirement account provider. They will provide you with the necessary paperwork and guidance to complete the rollover process. If you have your existing account numbers available, that will help speed up the process.
Q: Are there any tax implications when receiving a 401(k) rollover check?
A: Yes, there can be IRS- or state-related tax implications. If you choose to receive a 401(k) rollover check directly payable to you (i.e., an indirect rollover check), the plan administrator is generally required to withhold 20% of the distribution for federal income taxes. If you then complete a successful indirect rollover, you’ll receive that 20% back when you file your tax return the following year.
However, if you complete a direct rollover or trustee-to-trustee transfer, where the funds are transferred directly to another retirement account, you can avoid immediate tax withholding.
Q: What is the deadline for completing a 401(k) rollover?
A: The deadline for completing a 401(k) rollover depends on the specific rules and policies of your retirement plan and/or your plan sponsor. But in general, there are no deadlines for completing direct rollovers; many people choose to leave their old 401(k) plans with their former employers for many years.
If you’ve opted for an indirect rollover, however, you should complete the rollover within 60 days of receiving the distribution to avoid potential tax consequences. However, it is advisable to initiate the rollover process as soon as possible to ensure a smooth transfer and minimize any potential delays.
Q: Can I roll over a 401(k) rollover check into an IRA or another retirement account?
A: Yes, you can roll over a 401(k) rollover check into an IRA or another eligible retirement account. This allows you to maintain the tax-deferred status of your retirement savings and continue growing your funds in a new account, which may be an IRA account or a new employer plan.
Your rollover distribution, if done correctly, shouldn’t incur any income taxes or penalties.
Q: What are the benefits of a 401(k) rollover check?
A: There are several benefits to rolling over a 401(k) into another retirement account. These may include increased investment options, greater control over your retirement funds, potential cost savings in fees, and the ability to consolidate multiple retirement accounts for easier management.
You’ll also notice that, if you do a direct rollover, your 401(k) rollover check won’t be made out directly to you. It should be made out to the receiving financial institution “FBO” in your name. This helps preserve the tax-advantaged status of the plan distribution as it’s in transit to the new plan.
Q: Can I roll over my 401(k) into a Roth IRA?
A: Yes, it is possible to roll over your 401(k) into a Roth IRA. This process is known as a Roth IRA conversion. However, keep in mind that converting a traditional 401(k) to a Roth IRA will generally trigger a tax liability since the converted amount will be treated as taxable income in the year of the conversion.
Q: What are the tax implications of rolling over a 401(k) into a Roth IRA?
A: When you convert a traditional employer-sponsored 401(k) to a Roth IRA, the converted amount will be subject to income taxes in the year of the conversion. This means you will need to pay taxes on the converted amount at your ordinary income tax rates. It’s important to evaluate the potential tax impact before deciding to perform a 401(k) to Roth IRA rollover.
Careful, though, since mistakes with 401(k) transfers to accounts of different tax treatments can lead to income taxes, early withdrawal penalties, or both. Be sure to consult with a qualified tax advisor or financial planner to gauge what your tax impact might be.
Q: Can I roll over my 401(k) into a Traditional IRA?
A: Yes, rolling over a 401(k) plan account or other qualified retirement plans into a traditional IRA is common. This type of rollover is called a direct rollover or trustee-to-trustee transfer, so long as funds move directly from financial institution to financial institution. The funds from the pre-tax 401(k) are moved directly into a traditional IRA without triggering any immediate tax consequences.
Q: What are the benefits of rolling over a 401(k) into a Traditional IRA?
A: Rolling over a 401(k) into a traditional IRA brokerage account offers several advantages, including increased control over your retirement funds, expanded investment options (like an expanded list of mutual funds and ETFs), potential cost savings in fees, and the ability to consolidate multiple retirement accounts. It also maintains the tax-deferred status of your retirement plan assets.
Q: Can I roll over a 401(k) into both a Roth IRA and a Traditional IRA?
A: Yes, it is possible to split your 401(k) rollover between an after-tax Roth IRA and a traditional IRA. This strategy is known as a partial rollover or split rollover. By doing so, you can take advantage of both the tax-free growth potential of a Roth IRA and the tax-deferred growth of a traditional IRA.
Q: Are there any contribution limits for 401(k) rollovers into IRAs?
A: No, there are no contribution limits when rolling over a 401(k) into an IRA. The rollover amount does not count towards your annual contribution limit for IRAs, meaning your rollover won’t affect your ability to make traditional or Roth contributions.