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If you have a 401(k) retirement plan at Principal from a former employer, you have a few options, but rolling your funds over into an IRA is a great way to keep track of your savings and make sure you’re in control, not your former employer.
We’ve made it easy to roll over your Principal 401(k) into an IRA of your choosing, with three simple steps:
Step 1
Step 2
Step 3
Rest easy knowing you have an expert in your corner throughout the entire process.
If you have a 401(k) at Principal from a previous job, there are a few options for you to consider when doing a rollover. The process for Principal can be done either online, by phone, or by mailing or faxing their rollover request form.
Once the rollover is initiated, Principal will usually send a check directly to your new account provider and you should see your funds deposited in 10-15 business days after you’ve submitted the request.
Here, we’ll be exploring your options, learning about various investment products, and reviewing how to roll over your 401(k) plan with Principal Financial Group.
We’ve laid out a step-by-step guide to help you roll over your old Principal 401(k) in five key steps:
A “401(k) rollover” is the technical term for transferring money from an old 401(k) account to another retirement account or new employer’s plan.
Most people who roll over end up transferring their 401(k) savings into a new or existing IRA (Individual Retirement Account).
Required Minimum Distributions (RMDs) refer to the annual amounts of money that must be withdrawn from an employer-sponsored plan, simple IRA, traditional IRA, or SEP-IRA when an accountholder reaches their Required Beginning Date.
As of 2023, the age at which RMDs need to be taken is 73 years (the Required Beginning Date). The account owner needs to withdraw at least the amount of their RMD every subsequent year based on the IRS life expectancy tables.
First, get together any information you have on your Principal 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 or plan administrator can help. 401(k) paperwork can be confusing, so just focus on identifying the following items:
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:
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:
Your IRA can help you do two key tasks:
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.
Many financial service institutions offer IRAs, including firms offering brokerage accounts, 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 decisions, 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:
If you want the investing 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:
During the process of opening your new account, you may get asked which type of IRA you’d like to open. You might see the following options: rollover IRA, traditional IRA, or Roth IRA. Here’s how to pick the right one:
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. The next step is to initiate your rollover with Principal. Principal has a few methods for requesting a rollover to another institution:
The simplest way to submit a rollover request with Principal is by logging in to your online Principal account.
One you’re logged in, look for an option like “move assets”, “roll over money”, or “start a distribution”. These options can sometimes be hidden under an “actions” or “withdrawal” menu.
Ultimately, the option you want to select should explicitly say “rollover” and you’ll often need to specify that you want to move your funds “out of the plan” or “to another institution”.
Two other important tips to keep in mind while going through the online process:
Rolling over via form allows you to avoid a human conversation but can sometimes get rejected which will prolong the process. 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 or online to avoid any issues during processing.
You can download the Principal direct rollover form by logging into your online account. Once you’re logged in, follow these steps:
Once you have the form, you’ll need to fill out, sign, and send it back to Principal by mail or fax. The mailing address and fax number can be found on the rollover form.
If you prefer to speak to a Principal representative to make sure everything is good to go, you can also initiate your rollover over the phone. Contacting Principal directly over the phone allows you to correct any issues on your account, update your mailing address, and initiate the rollover all in one go. Principal‘s phone number should be visible on an old account statement, website, or on the distribution form.
In order for your call to go smoothly, follow these tips:
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. Principal will mail your rollover check to the address they have on file. If you need to update your address with them, just let the Principal rep know during the call and provide your current address.
Principal will typically send your 401(k) funds directly to your IRA or new 401(k). If that’s the case, simply keep an eye out for your rollover funds to hit your new account in 10-15 business days.
In some cases, they may send the check to you to deposit or forward to your new provider. There are a few ways you can deposit your check depending on the provider:
This unfortunately does happen every once in a while, but don’t worry — your money hasn’t disappeared. If your check doesn’t arrive then you’ll have to call your 401(k) provider again and ask them to issue a new one.
They’ll place a stop on the first one, and nobody will be able to cash the first (lost) check since it’s generally made out to you or your IRA provider and will always stipulate that it’s “for the benefit of” or FBO, your name.
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 can generate higher long-run returns but are also more volatile, you might consider owning a higher percentage in stocks in your early working career and gradually shift away from stocks as you near retirement.
Otherwise, you can assemble a portfolio on your own by making individual security trades. To get the full picture of your finances, investments, and tax, speak to a tax advisor for guidance.
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.
At Capitalize, we’ve made it our mission to make this process easier for everyone. If you choose to do a 401(k)-to-IRA rollover, we can handle the entire process for you. Most of the process can be done online and our rollover experts will guide you through any of the manual parts.
Best of all, our rollover service is 100% free to you.
