My Fat Rollover Check Arrived.
My $16,000 401k rollover check arrived today in a nice plain envelope. It’s actually the biggest check I’ve seen. Do you write a check when you buy a house? I guess the money gets zapped straight from your mortgage lender bank to the seller’s bank? Anyways, I thought I’d scan it for fun before I send it on to Vanguard.
(See my 401k rollover decision process. [link fixed])
Find more in Retirement | 8/22/05, 8:44pm | Trackback
August 22nd, 2005 at 9:47 pm
I have bought three houses now (not that I am an expert) and every time I have gotten a cashier’s check made out to me for the down-payment/closing costs. I then endorse the check and give it to the title company when the deal is done.
August 22nd, 2005 at 9:56 pm
I’m curious as to why you requested a check rather than doing a trustee-to-trustee rollover?
August 23rd, 2005 at 6:13 am
I have done the same thing as trip.
Yes, you can do a trustee-to-trustee rollover… but only if you buy and sell the houses in a short period of time (like you sell your house one day and buy another one the next day.
My purchases have been with cash from the bank that had been there for a few months (after being moved out of investment accounts into the bank accounts).
August 23rd, 2005 at 8:57 am
Ah, so no $300,000 checks exchange hands? Maybe $50,000 ones or so.
JLP - This was a trustee-to-trustee transfer. For some reason Fidelity doesn’t do it online. The wrote the check to Vanguard (click on pic to see big version) and then I have to send it on to Vanguard. They said they only do it directly for IRAs, not 401k rollovers. Shrug. I vented about this in my ‘Final Decision’ post too.
August 23rd, 2005 at 7:43 pm
We close Monday on our new home in Minnesota - we got a Bank Check (certified) for about $102,000 for down payment and closing costs.
Entertaining process - and the biggest check I’ve ever seen. Next time I think we wire the money.
Matt
August 24th, 2005 at 11:42 am
I just read all of the backstory related to your decision to switch from Vanguard to Fidelity. Very interesting, and rational, decision. However, I am curious: If Fidelity offered a fund with a similar allocation to the Vanguard Target 2045 Fund (VTIVX), would you have stayed with Fidelity? Or were some of the other issues you cited also important?
February 5th, 2006 at 11:34 pm
Maybe… at the time of the rollover Fidelity charged an extra layer of fees on top of the fees on the underlying funds. I think they have recently removed the fee due to pressure from Vanguard and other mutual fund companies that do not tack on this extraneous fee.
September 30th, 2009 at 10:04 pm
I understand that if you do a direct 401k rollover to yourself, your employer is required to withhold 20% of the money for submission to the IRS which will then be paid back to you once you rollover the funds to an IRA or another qualified plan.
Here is an example:
With a direct rollover, the check will be made out to the financial institution that holds and maintains your account. We advise NOT to instruct your old employer to make the check out in your name, as the tax consequences and penalties for doing this are severe! Here’s how. If the check is made payable to you, your former employer will be required to withhold 20% of your account value as federal withholding tax.
Source:http://www.research401krollover.com/direct-401k-rollover.html
As an example, if you have $100,000 in your 401(k) that is made payable to you in a check, your employer will withhold $20,000 for remittance to the government. Thus, in order to bring your balance up to $100,000 in your new account, you will have to pay from your own pocket, an additional $20,000 within 60 days of receiving the distribution. The IRS will then return the $20,000 owed to you when you file your tax return upon correct completion of your rollover.