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No matter where you started your career, you might be at a point where it’s come time to roll over your Prudential Financial 401(k) that you had through a former employer. Prudential is mostly known for life insurance and other financial advisor services, but they also act as a 401(k) plan sponsor and plan administrator.
Many people have a 401(k) with Prudential Financial, but some may want to transfer their retirement savings to another institution to take advantage of better investment options, lower fees, or other benefits.
Here, we’ll provide an overview of what a 401(k) rollover is, and why one may be necessary. We’ll also discuss the different types of rollovers along with their advantages and disadvantages.
Then, we’ll provide a step-by-step guide to rolling over a Prudential Financial 401(k) to another financial institution. Finally, we’ll offer tips for a successful rollover and highlight the importance of avoiding common mistakes along the way.
A 401(k) rollover takes place when you move your previous employer’s retirement plan to another account (and/or another financial institution) of your choice.
Many retirement savers choose to roll over their 401(k)s to take advantage of better investment options and lower fees, or to consolidate their retirement accounts.
With a 401(k) rollover, you’ll take greater control over your financial future. What’s more, a 401(k) rollover done right comes with no taxes or penalties. Finally, we find that people who take the active step to roll over their old retirement accounts have a better understanding of their investment picture overall, and have more of an opportunity to better manage their retirement savings.
There are two main types of rollovers: direct rollovers and indirect rollovers.
Direct rollovers happen when money moves from one financial institution directly to another. In this case, a direct rollover would happen between Prudential Financial and another financial institution — the one that you choose for your new account. If you’re going to roll over your former employer’s plan, we strongly recommend choosing a direct rollover since the potential for things to go wrong is significantly reduced relative to an indirect rollover.
Indirect rollovers are a bit more complicated. With an indirect rollover, you receive your former employer’s 401(k) funds personally, and then it’s your responsibility to re-deposit them to another retirement account before 60 days have elapsed. Failing to re-deposit your entire original 401(k) balance to a new retirement account within the timeframe can lead to costly taxes and penalties. Unless you need your retirement money to function as a type of short-term loan, we generally discourage indirect rollovers — if you can avoid them.
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Rolling over a Prudential 401(k) is a matter of following a few steps carefully. Below, we’ve outlined the steps to moving your old retirement savings account.
As you prepare for the rollover process, you’ll need to gather relevant information and documents, such as account statements and personal identification information. Important data might include:
All of this information, taken together, should help Prudential locate your old 401(k).
*To determine the type of rollover that’s best for your situation — and the account type you should roll into — consider your retirement goals and the related tax implications. Most people have the option of rolling their 401(k) into an IRA, and others can even merge their old 401(k) with their new 401(k) — if their current employer allows.
To initiate your rollover, you’ll need to contact Empower Retirement, LLC, which as of April 1, 2022, is the new point of contact for Prudential Financial 401(k) administration. You can learn more about the acquisition here.
Once you’ve contacted the financial professionals at Empower, you can request a direct rollover of your Prudential Financial 401(k) plan to a new retirement account (and new financial institution) of your choice.
You should also coordinate the rollover with your new financial institution as well. If you’ve decided to open an IRA at an online brokerage like Vanguard or Fidelity, they’ll let you know if they require any paperwork to complete the incoming funds transfer.
If you’re rolling your Prudential Financial 401(k) into a current 401(k) plan with a new employer, (if you’ve already managed to find a new job) make sure to confirm with your new employer that they’ll accept old 401(k) plan roll-ins.
As part of the process, be sure that you’ve reviewed and signed all documents to authorize the transfer of your retirement funds. It’s likely that both Empower (the company now administering your Prudential retirement account) and your receiving institution will require some authentication to ensure you have the authority to move money.
When you see the funds in your new retirement account, make sure to invest them according to your broader asset allocation. Whether you’ve moved funds to a traditional rollover IRA (Individual Retirement Account) or an after-tax Roth IRA, you’ll still need to take the active step of putting your money to work. Some providers offer automated portfolios, and others permit you to hold an annuity within the confines of your IRA.
If you see that the rollover isn’t progressing, or if several weeks have passed with no movement, reach out to both providers to see if either is missing any completed forms.
Some common mistakes that people make when rolling over a Prudential Financial 401(k) include:
To help avoid some of these errors, consider creating a checklist of all necessary steps or seeking guidance from a financial advisor.
Explain the potential tax implications of rolling over a Prudential Financial 401k, including potential penalties or taxes on early withdrawals.
If you roll over your 401(k) to another qualified plan (another 401(k) or 403(b)) you can avoid taxes and penalties entirely. Direct rollovers from pre-tax 401(k)s to traditional IRAs should also be clear of tax or penalty considerations.
Real issues can arise if you elect to take an indirect rollover from your distributing plan and fail to re-deposit your full pre-tax balance to another retirement account within the given 60-day timeframe*. If you don’t re-deposit the money in time, you’ll get hit with both taxes and a 10% early withdrawal penalty on the entire pre-tax balance. Ouch!
*Recall that all indirect rollovers from your old 401(k) plan account will have tax withholding to the tune of 20%. For instance, if you have a $100,000 401(k) plan balance, and choose an indirect rollover, you’ll only receive $80,000 in your bank account (since $20,000 will have been withheld for federal income tax).
It’s critically important that you choose the right institution to receive your 401(k) rollover. Some key considerations include:
Rolling over a Prudential 401(k) to Fidelity should function like most other rollover processes.
You’ll first need to open an account at Fidelity (either a traditional or Roth IRA, depending on the type of plan account you have at Prudential).
Then, you’ll need to contact Empower Retirement and have them locate your Prudential 401(k).
From there, request a direct rollover of funds to your new Fidelity account. Make sure to have all relevant information from Fidelity about your new account when you make the call to Empower.
If absolutely necessary, you can take a loan or withdrawal from your Prudential 401(k) at pretty much any time. You should contact Empower Retirement for all questions related to your Prudential 401(k), and to receive the forms necessary to request a withdrawal from your plan.
If you’re looking to roll over your Prudential 401(k), this is a separate process entirely, and is outlined in an earlier section.
Without question, there are a number of potential challenges when performing a rollover during a job change or retirement. However, it’s still possible to get through the rollover process without any tax consequences — and in a reasonable amount of time.
That’s where Capitalize comes in. There are many benefits to working with a trusted partner during a process with which you may be unfamiliar, not least of which is your own peace of mind.
Our free-to-use rollover service has helped thousands of retirement savers like you find a new home for their old retirement plan. Ultimately, we help people gain control of their money.
It just takes a few minutes to get started today!
