How to do a Voya 401(k) Rollover

Let’s cut to the chase: changing jobs can be a stressful time, and often involves quite a bit of planning and other administrative tasks. Not the most fun, but also necessary after you make a big life change.

If you have a legacy Voya 401(k) — or any other type of qualified plan — you might have considered doing a direct rollover of your former plan into another account, like an IRA (Individual Retirement Account). Fortunately, the IRS won’t come knocking as it relates to a direct rollover; most of these transactions, if performed correctly, are non-taxable.

Rolling over your 401(k) can have many benefits, including consolidating your finances, managing investment and advisory expenses, and widening your investment options.

Here, we’ll discuss how to roll over your Voya 401(k) to either another 401(k) plan or to an IRA at an online brokerage firm of your choice.

What is a Voya 401(k)?

A Voya 401(k) is a tax-advantaged retirement savings account administered by Voya Financial (NYSE: VOYA). Many different employers across the country utilize Voya’s 401(k) plan services when developing a workplace retirement plan.

More broadly, the company is a financial, retirement, and investment management company based in New York. Initially, the company was a subsidiary of ING, Inc. until its spinoff and subsequent IPO in 2013.

In this context, we will examine Voya as a 401(k) plan administrator.

The core benefits of a Voya 401(k) include:

• Diversified investment choices, including Voya mutual funds
• A wide array of goal-based and target-date mutual funds (ideal for easy selection)
• Tax-deferred 401(k) options compatible with ERISA rules

Options for Your Voya 401(k) When Changing Jobs

If you have a Voya 401(k), you have a variety of options if you decide to change jobs.

If this is you, you can:

• Keep your Voya 401(k) right where it is. Fortunately, this is the “lowest-lift” option, but it does mean you’ll need to be happy with the mutual fund investment options and fee structure that Voya offers.
• Cash it out. Unless you need the money for a dire emergency, it’s not advised to cash out your 401(k) early. You’ll be hit with ordinary income tax no matter when you withdraw the money along with an early withdrawal penalty of 10% (if you’re under age 59.5).
• Roll over your Voya 401(k) to a new employer plan. If you’ve already found a new role and your new employer has a 401(k) retirement plan that allows roll-ins, you can combine your old 401(k) with your new one. This can make sense if you see that the new 401(k) plan is more to your liking than the old one.
• Roll your Voya 401(k) to an IRA. Opening a new IRA account or using an existing IRA account to receive your 401(k) are also options for a direct rollover. With an IRA, you’ll have additional flexibility around investing and more control over fees. Like 401(k)s, IRAs are still subject to Required Minimum Distributions later in life.
  • Note: if you have a pre-tax (sometimes called traditional or tax-deferred) 401(k), you will need to open a traditional IRA to roll over your former employer’s plan. If you have an after-tax Roth 401(k), you’ll need to transfer it to a Roth IRA. Mixing this up can cause a tax mess, so be sure to consult with a qualified tax advisor before making any sudden moves.

How to Roll Over Your Voya 401(k)

To roll over your Voya 401(k), you’ll need to follow the steps below.

If this is the first time you’ve rolled over an old retirement plan, fear not — Voya and other similar companies handle these requests on a daily basis, so it’s more than likely that they’ll understand where you’re coming from and be able to help you.

Before you get started, try to gather the following information:

• Account number of your old 401(k) at Voya (check a recent statement if you don’t have it on hand)
• The type of account you have with Voya — specifically, if it’s a Traditional or Roth 401(k)
• Former and current addresses
• Your Social Security number, if Voya is unable to locate your account by other means

Determine the Desired Account

In terms of where to send your old 401(k) account balance, you generally have two options:

• Your new 401(k). If you elect this option, be sure to check with your current employer as to whether they allow roll-ins. In other words, make sure that they’ll accept the rolled-over money when it arrives. Also, give a look to your new company’s 401(k) plan document to determine if you’re satisfied with the investment options and fees.
• A new or existing IRA. An IRA tends to make sense for people who want a wider universe of investment options and for those concerned about 401(k) fees. You’re also able to have a bit more control over the account in general, since you’ll open it up at a provider of your choice. This is a time when it pays to shop around and see which interface you like best — especially if you don’t already have an existing IRA account.

Open The Relevant Accounts

If you’re already working for another employer and have not yet signed up for their 401(k) plan, be sure to do so within a reasonable amount of time. You’ll want to be sure to take advantage of any employer matching as well as any other sort of employer stock compensation. Then, make sure to check that your 401(k) accepts roll-ins.

If you’ve decided to roll over your account to an IRA, take some time to visit a few online brokers to see if you like anyone in particular. Some of the more popular sites include Vanguard, Fidelity, Charles Schwab, Betterment, and Wealthfront.

Once you’ve decided on a plan of action, write down or print out all identifying account information of the account you’ll be rolling money to. This includes the account number, the type of account, and the platform where it’s located.

Begin the Rollover Procedure

Once you’ve done the pre-work, it’s time to initiate your rollover. The first call should be to Voya Financial, who will validate your identity and locate your account.

You’ll want to request a direct rollover of your old 401(k) plan. This means that you won’t actually receive the money in your bank account, but that Voya will send the money via electronic transfer or check to the receiving institution. Once the receiving institution gets the money, they will deposit it into your new account (either the 401(k) or the rollover IRA you chose in an earlier step) on your behalf.

Remember that a direct rollover to either a 401(k) or an IRA — assuming that you roll money between accounts with the same tax treatment — should cost nothing in federal or state income tax. These rollovers, when done properly, are nontaxable (or tax-free) events.

An indirect rollover tends to be a bit more complicated. In this scenario, Voya would cut you a check for the balance of your 401(k), and you’d receive the money directly. Here, however, Voya would be obligated to withhold taxes on any amount paid to you, and you’d then be responsible for depositing the entire original balance, before taxes to your new account within 60 days. If you fail to do this, you could run into major tax headaches — plus penalties.

In any event, once the money arrives to your new account, you’ll be responsible for investing the money according to your broader asset allocation. In other words, you want all of your invested money working together to give you an investment outcome suitable to your risk tolerance. Take this opportunity to create a written plan around your investments, and if need be, seek the help of a qualified financial planner or tax advisor to help.

Additional Factors to Consider

When you go to transfer your Voya 401(k), be confident in the account type you’re moving. For example, if you have a pre-tax, or tax-deferred, 401(k), make sure you roll the money to another tax-deferred account, like a current 401(k) plan or a traditional IRA.

If you make the mistake of rolling a traditional 401(k) to an after-tax Roth IRA, you’d be liable for ordinary income tax on the entire account balance. If you have a substantial amount of money in your Voya 401(k), you could be hit with a tax bill reaching the four, five, or (gulp) six figures! Be very clear as to the tax status of each account you’re working with to avoid any unpleasant surprises come tax time.

Finally, the Internal Revenue Code considers most of these rollovers, when done correctly, to be nontaxable — or free from income tax consequences. Federal income tax should not enter the equation; all you’re really doing is moving money from one provider to another, but the key is to keep an eye on the tax status of your Voya 401(k) and that of the account you’re rolling it into.

Final Thoughts

If you have an old Voya 401(k), you have several options. You can roll it over to another 401(k), or an IRA of your choosing, leave it exactly as it is, or you can cash it out (generally not recommended).

Rolling over your employer-sponsored plan is usually a pretty simple process that most people can complete with one or two phone calls. Be sure to review the steps above if you’re stuck on any particular part.

If you’re having any trouble at all, or even if you just want validation, working with a trusted partner to manage the rollover process can provide added peace of mind.

That’s where we come in — Capitalize can be your trusted partner to help with any 401(k) rollover issues you may encounter along the way. Our team of customer service reps will help you wherever you are in your rollover process.

Check out our website — and its Resources section — to find out more about Capitalize and to get started working with us!

Additionally, don’t be afraid to seek the help of a qualified tax advisor or certified financial planner if you need more specific help (like how to open a brokerage account!).