HELP: Trying to convert 401k from ex-employer to IRA with online brokerage but having problems...

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inquisitive_IHB

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First, off i am only 32 yrs old, single and not near retirement age yet. I was laid off with a former employer several years ago and had invested in a 401k. Well, i've decided to just last week to transfer that money from the 401k to my online brokerage IRA account(Scottrade). My 401k funds were with Citistreet(now called ING). It took several days to get my ex-employer(plan administrator) to send me the forms to get this going. When i tried to fill it out, i was confused on a couple sections. Here is the application for service distribution. The first section was:

DISTRIBUTION REASON 1). Attainment of Normal Retirement Age

2). Attainment of 59.5

3). Plan permits distribution of my After-tax Contributions

4). Plan permits distribution of my Rollover Contributions

5). Plan permits Before Age 59.5 distribution(only available from my After-tax, Employer and Rollover contributions to the extent that plan permits)

6). Plan termination-- Date of Plan Termination(required):___________ (only 100% payout permitted).





My question on this section is that i just want all my money from this account to be transferred to my IRA account with Scottrade, so would i select option 6 since i no longer work for them, eventhough, it isn't a planned termination, but the fact that i got laid off with that company several years ago? Or do i go with option 4 since it is a transfer(aka rollover ?).



The other section that i am not sure on what to select is:



PAYOUT OPTIONS*:(please only check one option)

A). Single Sum Distribution(No Direct Rollover)

Partial Plan Account balance of _______ % OR $__________

B). Direct Rollover Options- If you choose one of the following direct rollover options, you need to do section 4

Single Sum Distribution of ______% OR $__________ of my Plan account consisting of a Direct Rollover of earnings and before-tax contributions and payment of any applicable after-tax contributions(excluding earnings) to me

Direct Rollover of Partial Plan Account balance of _____% OR $_________, including any applicable after tax contributions(with earnings). Make sure that the receiving eligible retirement plan is willing to accept and separately account for after tax contributions.



*Because of market fluctuation, the amount requested might not be available at the time of your form is processed. If the value of your plan account declines, so that amount available is less than the amount requested, we will process your distribution the maximum amount available. Percentage is applied on the plan account when the claim is paid.



My question on this section is that i just want ALL of my net account value at this time to be transferred to my Scottrade IRA. What option should i select then?



Here is section 4 of the form if anyone wants to see. In this section, i would just put Scottrade in Institution part and IRA in Plan type and 100% in rollover though i don't know why they didn't ask for the Scottrade IRA account # also?



SECTION 4: ROLLOVER INFORMATION

If you selected any payout option under direct rollover (Section 3, Option B), you must complete this section.

A direct rollover occurs when your distribution is paid to an eligible retirement plan(including an IRA) that has agreed to accept this rollover. Please indicate the institution to recieve your rollover money. The payee must be an insurance company, bank, trust company, IRS-approved custodian or employer plan trustee.



Name of Institution Plan Type--indicate which one: IRA, 401(k), 401(a), 403(b), Government plan % of Rollover

***************** *************************************************************** *****

Scottrade IRA 100



Thanks for any help on this!! Take care
 
Did the same thing just last December. All I did was call Fidelity--my 401k custodian--and asked them to cut me a check made to "Scottrade c/o ???" or whatever designation required to avoid early distribution penalties and then listened to their sales speech as to why they should be my Traditional IRA custodian. I simply declined and explained Scottrade doesn't charge me the additional fees.



Anyway, Fidelity mailed me the check in which I immediately took to my Scottrade branch for setting up an IRA. Hardly complicated and took minimal effort. A month and a half later, I received a 1099-R with a distribution code 'G' and all is well.



Easy: Handled the front end on the phone. Received the specially noted check. Handled the back end in person. I didn't have to fill out a bunch of forms on either side. Scottrade knows me well and used some copy function from another Scottrade account. The early distribution penalties had me freaked out, so I preferred dealing with real people rather than risking a mistake by filling out a form incorrectly. Hope this helps.
 
[quote author="inquisitive" date=1239022921]



Thanks for any help on this!! Take care</blockquote>


None of the distribution reasons selections appear to apply in your case. Most plan trustee's have forms that indicate separation/termination of service/employment as one of the distribution options. Section 1, option 6 refers to the discontinuation/termination of the employer-sponsored plan, i.e. the 401k plan. When plan terminations occur, the dollars are most usually left with the plan trustee and it's up to the individuals to roll the funds over. I am a plan administrator and plan fiduciary and all four trustees I have used, T.Rowe, Hancock, Fidelity, and Principal Financial, have separation of service as a qualified reason for distribution.



Feel free to email me a copy of the form, ipoplaya@gmail, and I will review in more detail if you'd like. Also, you can bypass your former employer directly and contact the plan trustee directly for assistance with the rollover. They should be able to verify you have been supplied the appropriate form and should explain the selection options.



On the payout option section, you will want "Single Sum Distribution of ______%" of 100%. I am assuming the your Scottrade IRA is not a Roth...
 
[quote author="ipoplaya" date=1239027273][quote author="inquisitive" date=1239022921]

... Also, you can bypass your former employer directly and contact the plan trustee directly for assistance with the rollover. They should be able to verify you have been supplied the appropriate form and should explain the selection options...</blockquote>


I've done this about three times since 2000. Each time, I just called the future account holder and said the equivalent of 'fetch boy, fetch'.



They'll ask you the questions, document the answers and then go get your money for you.
 
I was told by ING to contact my ex-employer(plan administrator) to fill out a form(one that i posted) and my ex-employer would send them(ING) the form. They would then take care of it with Scottrade. Scottrade also told me to let them know when ING sends the check in their name(Scottrade). This was what i was told.
 
Hey guys,

I noticed that ING also sent me a form a while back. However, i was still told to fill out form by ex-employer and send/fax it to them. Here are the forms:(sent by ex-employer and ING). They look similar but still different. The "In service" one is the one the ex-employer sent. The "claims distribution" one is the one sent by ING(formerly Citistreets).
<fieldset class="gc-fieldset">
<legend> Attached files </legend> <a href="http://www.talkirvine.com/converted_files/images/forum_attachments/305_P6SX97xPGEsmO68ZUx2H.pdf" target="_blank" class="gc-files">in_service[1].pdf</a> <span class="gc-filesize">(140 B)</span> </fieldset>
 
For some reason, i can't attach the "claims distribution" from ING here in the forum, so i am pasting it here.



Step 1: Participant Information

Employer/Plan Name Employer/Plan Number

- -

Participant Name (print full name) Social Security Number or Taxpayer Identifying Number

- -

Home Address Daytime Telephone Number (optional)

/ /

City State Zip Code Date of Birth (MM/DD/YYYY)

US citizen: ???? Yes ???? No

* If you need help completing any of the steps on this

form, please refer to the attached Form Instructions.

For additional assistance, see your Plan Administrator.

*PIDS00300300000000000PIDS





Step 2: Distribution Payout Options

Please complete only one section: A, B, C, or D

Section A

Rollover options (check one):

???? Rollover of entire account balance.

???? Partial rollover of account balance and a single sum distribution (payout) of the remaining account balance.

???? Rollover of my pre-tax account balance and a single sum distribution of my after-tax account contributions.

???? Partial rollover of account balance and leave the remaining balance in my account.

???? Wire my rollover to my existing Smith Barney IRA account

Participant Account # % of total account balance or specific $ amount

- - -



SB Bank Account # 30604518 ABA # 021000089

or

???? I want to open a Smith Barney rollover IRA account. Please designate Smith Barney as the Receiving

Institution on my rollover check and mail it to me. I will contact Smith Barney to establish the account.

???? Please designate the institution(s) listed below (which are eligible Retirement Plan accounts) and mail the

rollover check(s) to me.

_____________________

Other Receiving Institution(s) % of total account balance or specific $ amount

or ___________

or ____________

TOTAL Rollover % or $

Section B

Single Sum Distribution ? Cash, less taxes (check one):

???? Entire account balance

???? Entire after-tax account balance (taxes will be withheld based on earnings)

???? Partial account balance: __________ % or $ ________________

Step C

MetLife Life and Annuity Company of Connecticut Annuity:

???? You must attach the signed and completed MetLife Life and Annuity of Connecticut form specifying your choice

of annuity and electing your tax withholding. A MetLife Life and Annuity of Connecticut annuity may be

purchased by calling 1-800-842-7102.

Section D

Single Periodic Payments:

???? Fixed dollar amount $ ______________________

Frequency of distribution: ???? Monthly ???? Quarterly ???? Semi-annually ???? Annually

???? Fixed period (enter 1-9) ____________ years

Frequency of distribution: ???? Monthly ???? Quarterly ???? Semi-annually ???? Annually



Step 3: Participant?s Election

Complete this section only if your Plan Account is held under a plan for which your Spouse?s Consent is required.

I certify that:

???? I do not have a Spouse. (If your divorce is final and you have not married again, whether by ceremonial, proxy,

informal, or common-law marriage, you do not have a Spouse. If you are separated, but your divorce is not final,

you do have a Spouse.)

???? I have a Spouse. Your election is valid only if the Spouse?s notarized consent is completed.

???? My Spouse cannot be located. I must inform the Plan Administrator if the location of my Spouse becomes known.

I understand that the Plan Administrator may make an investigation as to the whereabouts of my Spouse.

???? A court has determined that my Spouse and I are legally separated. You must attach certified copies of all court

orders.

???? A court has determined that my Spouse has abandoned me. You must attach certified copies of all court orders.

I received the Explanation of Qualified Joint & Survivor Annuity (QJSA) and elect the form of distribution indicated on the

attached distribution form.

I certify that everything I said on this form is true, correct and complete. I understand that I may be subject to civil and

criminal penalties and punishment for any knowingly false statement on this form. If the Plan Administrator approves any

Benefit in reliance on my false statement, I will be liable for the damages, including (but not limited to) investigation

expenses and lawyers? and legal assistants? fees.

/ /

Participant Signature Date

If you checked ?I have a Spouse,? above, your Spouse?s Notarized Consent must be provided.

Step 4: Spouse?s Notarized Consent to Waive a Qualified Joint & Survivor Annuity

I am the Spouse of the Participant. I received the Plan?s Explanation of the Qualified Joint & Survivor Annuity (QJSA) and

consent to the distribution indicated on this form. I understand that I have the right to have the Participant?s retirement benefit

paid in the QJSA payment form, and I consent to give up those rights. I understand that by signing this consent, I may receive

less money than I would have received under the QJSA payment form and I may receive nothing after the Participant dies

depending on the payment form or beneficiary that the Participant chooses. I understand that I may limit my consent to a

particular payment form and a particular beneficiary.

/ /

Spouse?s Signature Date

This form will not be accepted unless it bears the Notary?s official seal. The Notary cannot be an employee of

ING or any of its affiliates.

CERTIFICATE OF NOTARY PUBLIC

I certify to the Plan Administrator that on the date written below before me personally appeared the above-named Spouse,

personally known to me or satisfactorily identified to me, and s/he signed this document in my presence for the purposes

stated by it, without any undue influence. My commission has not expired. In addition to any civil and criminal punishment

that may apply under the laws of the state that appointed me as a Notary Public, I understand that under federal law if I

made a false statement I can be fined $10,000 or imprisoned for up to 5 years or both.

/ /

Step 5: Tax Withholding Allowances

Select State income tax withholding election below. (Please read the Notice below. If you do not state your instruction, we

will withhold the amount required by applicable law.)

If your State requires State income tax withholding on your distribution, ING will withhold the amount required by your

State. You may elect to have ING withhold from your distribution more than your State requires. If you elect State income

tax withholding and your State doesn't apply a State income tax, ING won't withhold State income tax.

? ???? I elect to have ING withhold % in addition to my State?s required withholding

- OR -

? ???? I elect to have ING withhold $ in addition to my State?s required withholding

Notice: Before you decide whether to choose withholding, please understand that there are penalties for not paying

enough tax during the year, either through withholding or estimated tax payments. If you elect not to have State income tax

withheld, you are still liable for payment of State income tax on the taxable portion of your distribution. Also, regardless of

your election, you are still responsible for estimated tax payments if any tax withheld is not sufficient to meet your State

income tax obligations. You may be able to avoid quarterly estimated tax payments by having enough tax withheld from

your retirement plan distribution. For more information, read IRS Publication 505 and consult your tax lawyer or

accountant.

Step 6: Participant Certification

I received the Special Tax Notice Regarding Retirement Savings and Stock Ownership Plan Payment concerning the

federal income tax treatment of this distribution and any existing loan amounts. Any amount not directly rolled over will be

paid directly to me. I understand that at least 20% of any eligible rollover distribution amount will be withheld as federal

income tax in addition to any mandatory state tax withholding. I understand that if this distribution is taxable and if made

before my age 59 ?, it also may be subject to an additional 10% penalty tax.

Please be aware of the following rules, which apply to the extent provided by your plan or required by applicable law: You

have the right to defer receipt of your distribution. You have a right to consider up to 30 days after you receive the Special

Tax Notice Regarding Retirement Savings and Stock Ownership Plan Payment, whether to consent to this distribution.

For information about your plan?s payout options, you may refer to your plan?s summary plan description. By making this

claim, you affirmatively elect this distribution and waive your right to the 30-day delay.

I certify, under penalties of perjury, that:

? Everything I stated on this form is true, correct, and complete.

? My Social Security Number or other Taxpayer Identifying Number shown on this form is correct.

? I am not domiciled in or a resident of any place other than the address shown on this form.

? I have been informed that I can elect to have more than the mandatory state income taxes withheld from

distributions paid directly to me.

I understand that I am subject to civil and criminal penalties and punishment for any knowingly false statement on this

form or any papers attached to or related to this form or my claim under the plan. If an insurer or a custodian pays or fails

to pay any benefit in reliance on my false statement, I will be liable for the damages, including (but not limited to)

investigation expenses and lawyers? and legal assistants? fees.

/ /

Step 7: Employer/Plan Administrator Instructions and Approval
 
[quote author="inquisitive" date=1239053223]Hey guys,

I noticed that ING also sent me a form a while back. However, i was still told to fill out form by ex-employer and send/fax it to them. Here are the forms:(sent by ex-employer and ING). They look similar but still different. The "In service" one is the one the ex-employer sent. The "claims distribution" one is the one sent by ING(formerly Citistreets).</blockquote>


An in-service distribution is for people that are still working for a particular employer. Note the term "In Service"... IMO, they gave you the wrong form and that is why the appropriate reason for distribution is not indicated. I would suggest you contact your former employer and seek out the appropriate form. In service distributions can have very different tax consequences than post termination distributions...
 
I think so too. I called my ex-employer and asked them to call ING back to see if the proper forms were sent since the ING forms seemed more in line with what i wanted to do.
 
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