How to roll over a MassMutual 401(k)

While most people know about MassMutual (formally Massachusetts Mutual Life Insurance Company, according to FINRA) for their life insurance policy and annuity plan offerings, they also offer retirement plan services and are a common 401(k) plan sponsor. If you have a 401(k) retirement plan at MassMutual from a previous job, there are a few options for you to consider when doing a rollover.

MassMutual is now part of Empower, and depending on your plan, the process requires either a form to sign or a phone call to authorize. In most cases, a check will be mailed for you to deposit into your new retirement account.

We’ve laid out a step-by-step guide to help you roll over your old MassMutual 401(k) in five key steps:

1. Confirm a few key details about your 401(k) plan
2. Decide where to move your money
3. Initiate your rollover with MassMutual (now Empower)
4. Get a check in the mail and deposit it into the new account
5. Make sure your funds are being invested properly

STEP 1

Confirm a few key details about your MassMutual 401(k)

First, get together any information you have on your MassMutual 401(k). It’s okay if you don’t have a ton, but any details like an old account statement or an off-boarding e-mail from your former HR team can help. 401(k) paperwork can be confusing, so just focus on identifying the following items:

1. Is your account eligible for a rollover? In most cases, it takes about 2 weeks from the time you leave a company for your 401(k) to be eligible for a distribution or rollover. You can confirm that your plan is able to be transferred by contacting Empower or your previous employer’s HR department or plan administrator.
2. Do you have a Traditional or Roth 401(k)? This will determine which type of IRA you’ll need to open (more on this in step 2). The vast majority of people have a traditional 401(k), and this is almost always the default option in a 401(k) plan you’d have access to at work. Only 12% of 401(k) plans even offer a Roth 401(k), but it’s worth checking. What’s the difference between the two? Just the way your contributions were taxed. With a Traditional 401(k) your contributions came out of your paycheck with no taxes paid. With a Roth 401(k) your contributions came out after taxes were paid.
3. Is your mailing address up to date? Make sure your mailing address is updated on your 401(k) account. They’ll use this address to send you a paper check as part of the rollover process. If you need to update your address, make sure to do so during your phone call authorization (more in step 4).

STEP 2

Decide where to move your money

In order to move the money out of your 401(k) account, you’ll first need to have an account opened for that money to move into.

You have two main options:

1. An IRA — an IRA is an “individual retirement account”. As the name suggests, it’s an account you open up on your own and it isn’t connected to an employer.
2. A new 401(k) — you might have an active 401(k) account with a current employer. If so, you may be able to transfer your old 401(k) savings into that current account. This isn’t always possible though, and you’ll need to check with your current 401(k) provider and HR person.

We’ve written a full guide on the five key differences between 401(k)s and IRAs if you’re trying to understand all of the differences.

Ultimately, most people who roll over an old 401(k) do so into an IRA for a few key reasons:

• Not tied to an employer — IRAs are generally easier to keep track of since they’re opened by you at an institution of your choice like Fidelity, Vanguard, or Betterment.
• A wider range of investment options — your 401(k) account generally has a limited set of investment options. With an IRA, you can invest your money in a wide range of stocks, ETFs, and even private assets like angel investments and cryptocurrency.
• Quicker process — according to the GAO, rollovers into 401(k)s tend to be more time-consuming and administratively challenging than rollovers into IRAs.

Think of your IRA as helping you do two key tasks:

1. Receive the money you’ve saved in your 401(k) at previous jobs so you can consolidate your savings and keep track of them.
2. Grow that money by allocating it to investments that will increase over time.

The good news? Opening an IRA can almost always be done online and should take you less than 10 minutes if you don’t already have one.

Allocating your IRA savings to investments will help it grow over time.

How do I choose an IRA provider?

Many financial institutions offer IRAs, including brokerage firms, banks, and newer “fintech” companies. In order to pick the best account for you, there’s one up-front question to answer:

Do you want to make your own investment decisions, or would you rather have the investing decisions made for you so you can just set-it-and-forget-it?

If you want to make your own investment selections, then what you’ll want is a self-directed IRA. That allows you to make your own trading decisions and invest in whichever financial securities you’d like.

The key features to compare when choosing among self-directed IRAs include:

• What do you want to invest in? The exact investment options among IRA providers vary. Most of them allow you to invest in stocks, mutual funds, ETFs (exchange-traded funds), and options. Other specialized IRA providers will let you invest in private assets and cryptocurrency.
• Access to research and data. Some brokers provide access to premium research and data. If you’re a more hands-on investor, this might be important to you.
• Ease of use — while user interfaces are getting better across the board, newer fintech providers tend to be more popular with those who really value an intuitive app experience.

If you want the investment decisions made for you then you’ll be best served by an automated IRA, also known as a robo-advisor account. Here you’ll answer a series of questions (known as a “risk-tolerance questionnaire”), and your answers will be used to create a diversified portfolio that suits your personal and financial situation. That portfolio is then rebalanced automatically over time without you having to do any work. It’s a great tool for those who don’t want to spend much time managing their investments.

The key features to compare when choosing an automated account include:

• Annual fee — most automated accounts charge an annual fee that’s expressed in percentage terms — e.g. 0.25%. This is the percentage of your assets that they’ll take annually for managing a portfolio for you. For example, if your automated IRA charges 0.25% and you have a $10,000 account you’ll pay $25 per year to the IRA provider. This fee is often referred to as an advisory fee or management fee. Most fees range from 0.25% – 0.50% so be wary of paying more than that. Some providers now even offer zero-fee accounts. Nothing is truly free though, since these IRAs will often fill your portfolio with their own proprietary exchange-traded funds (ETFs) which have their own fees.
• Ease of use — the original providers of automated accounts were tech-first companies like Betterment and Wealthfront who sought to provide a simpler, more intuitive user experience. While more established companies now offer automated accounts of their own, the newer upstarts maintain a usability advantage.
• Level of customer support — on the other hand, the longer-standing, bigger companies have more robust customer support systems built over many years, including well-staffed call centers and often even branch networks. If that’s important to you, then a larger institution might be your bet.

Get matched with an IRA provider based on your preferences! If you choose to do a 401(k)-to-IRA rollover, we’ll match you with a provider based on your preferences as part of our rollover process.

STEP 3

Initiate your rollover with MassMutual (now Empower)

1. You’re making great progress. You’ve confirmed key details about your 401(k) plan and you have an IRA to transfer your money into. As of 2021, all MassMutual retirement accounts are now part of Empower Retirement. This means you’ll need to request your funds are now managed by Empower and you’ll need to request the rollover through them. Empower has two methods for requesting a rollover to another institution:
   1. by calling Empower’s MassMutual line
   2. by filling out a direct rollover request form

Authorize via Phone

In most cases, the easiest way to initiate a rollover for your MassMutual 401(k) (now with Empower) is by calling and speaking with an Empower financial professional. Requesting a rollover over the phone allows you to confirm your information, correct any issues on your account, update your mailing address if needed, and initiate the rollover all in one go. Empower has a specific phone number to call for MassMutual rollovers, listed here.

In order for your call to go smoothly, follow these tips:

1. Set aside 30 minutes and a quiet space in which to make the call. Most of the time the call itself will take around 10 minutes, but there can often be a waiting time before you’re connected to an operator.
2. If you have an old 401(k) statement, keep it handy. No worries if not — you’ll be asked for your social security number and some other personal details to verify your identity.
3. Before you do the call, log into your new IRA account. Note down the following information:
   • Your IRA account number
   • Any other check-related instructions. These details are usually found on the IRA provider’s website in a “Funding” or “Rollover instructions” section and include things like the name of the institution to whom the check is made out (usually the full legal name of the IRA provider you’ve chosen).

Then place the call. Be prepared for a little hold time but in our experience, the entire call should take no longer than 30 minutes.

Don’t forget to confirm your mailing address during the call. Empower will likely mail your rollover check to the address they have on file from your MassMutual account. If you need to update your address, just let the rep know during the call and provide your current address.

Authorize via Form

In some cases, you may be able to request a rollover by faxing or mailing Empower’s rollover request form. If you’ve confirmed that your mailing address and contact information on your account is correct and that your plan is eligible for a rollover, initiating your rollover via form is worth considering. If you aren’t sure, you may want to initiate your rollover over the phone to avoid any issues during processing.

The rollover distribution form can be found online through your MassMutual Retiresmart account. Your account is now managed by Empower but you should still have online access through the MassMutual website (MassMutual.com).

Once you’re logged in, click on “My Account” at the top of the page and select “Forms”. You’ll need the “Distribution Election Form” form.

You’ll need to fill out, sign, and send the form to MassMutual by mail. The mailing address can be found at the end of the form.

STEP 4

Look out for your check in the mail and deposit into your new account

In most cases, Empower will send your MassMutual 401(k) funds directly to you by a paper check in the mail, using the address they have on file for your account. Once you get the check, it’s then up to you to deposit that check with your new IRA provider.

There are a few ways you can deposit your check depending on the provider:

• Mobile deposit — the easiest option is to check your provider’s mobile app to see if they have a mobile deposit option. Not all providers provide this option but it’s worth checking. Mobile deposits are the quickest option and typically take 3-5 business days to show up in your account.
• Deposit in person at a local branch — if your provider has a physical branch nearby, you can also deposit the check in person. Checks deposited in person typically take 3-5 business days to show up in your account.
• Send the check by mail — you can also send the check by mail to the provider using the address you previously looked up. Funds that are mailed can take up to 15 business days to show up in your account.

STEP 5

Make sure your IRA is being invested appropriately

Remember there are two goals of rolling over an old 401(k) into an IRA — the first is to consolidate your 401(k) assets, and the second is to grow those assets by allocating them into investments that will increase in value over time.

Your very last step in executing a rollover is to make sure that the second goal is being met and that the funds in your IRA are being appropriately invested. If you chose an automated IRA then this should happen automatically. That’s because as soon as your funds arrive they’ll be allocated into a portfolio that was created for you during the sign-up process for your new IRA account. You should still log in and check to make sure that’s the case, but usually, there’s nothing more for you to do.

If you choose a self-directed account then you’ll have to invest the money yourself. Often the simplest option is to purchase a target-date retirement fund — this is an investment vehicle that puts your money into a combination of higher-risk, higher-return stocks and lower-risk, lower-return bonds. The exact mix changes as you age so that you have more stocks when you’re younger and less as you get older: because stocks generate higher returns but are more volatile we should own more of them early on when we can withstand their fluctuations in order to achieve their higher long-term returns.

Otherwise, you can assemble a portfolio on your own by making trades.

Conclusion

401(k) rollovers are a great way for you to tax-efficiently transfer the savings in old 401(k) accounts you have. If you roll over into an IRA, you may also be able to invest in a wider range of assets.

The process can seem a little daunting, but there are just five key steps to follow. Most people who complete a rollover are glad they did. The assets in accounts like your IRA will probably end up being your biggest source of financial support when you retire. Investing a little time to get those assets set up and working for you in the right way can really pay off.

Extras

Roth conversions

For those who want extra credit: you may have heard of the term “Roth conversion”. That’s when somebody rolls over a traditional 401(k) into a Roth IRA. Why would somebody do this? It all comes down to taxes. Recall that with a traditional 401(k) your contributions are made pre-tax. When you roll over a traditional 401(k) into a traditional IRA, your assets continue to grow with no taxes being paid — until you start withdrawing your money, usually at the time of retirement. At that point, you’ll pay income taxes at whatever your rate will be then. If you believe your income tax at retirement will be greater than your income tax today, then it might make sense to consider a Roth conversion. This allows you to pay income taxes on your rollover amount today. Then, the money in your Roth IRA grows and can be withdrawn tax-free.