Rolling over a 401(k) from Lincoln Financial can seem like a daunting task, but with the right information and a step-by-step approach, you can navigate the process smoothly. Whether you're changing jobs, retiring, or simply seeking more control over your investments, a 401(k) rollover allows you to transfer your retirement savings to a new account, typically an Individual Retirement Account (IRA) or a new employer's 401(k) plan. This comprehensive guide will walk you through each crucial step.
Let's begin! Are you ready to take control of your retirement savings?
A Comprehensive Guide to Rolling Over Your Lincoln Financial 401(k)
 |
| How To Rollover 401k Lincoln Financial |
Step 1: Understand Your Options and Why You're Rolling Over
Before you initiate any action, it's essential to understand why you're considering a rollover and what your options are. This initial reflection will guide your decisions throughout the process.
Why Roll Over Your 401(k)?
More Investment Choices: Often, a self-directed IRA offers a wider array of investment options (stocks, bonds, ETFs, mutual funds) compared to a typical 401(k) plan, which might have a limited selection.
Lower Fees: Some 401(k) plans, especially older ones or those from smaller employers, can have higher administrative and investment fees. Rolling over to an IRA with lower-cost funds can potentially save you a significant amount over time.
Consolidation: If you have multiple 401(k)s from previous employers, consolidating them into a single IRA can simplify your financial planning and make it easier to track your retirement savings.
Greater Control: An IRA gives you more direct control over your investments and often comes with more flexibility regarding withdrawals (though penalties apply for early withdrawals).
Simplified Estate Planning: Consolidating assets can simplify the process for your beneficiaries if something happens to you.
Your Rollover Destinations:
You generally have three main options when rolling over a 401(k) from Lincoln Financial:
Option A: Roll Over to a New Employer's 401(k): If your new employer offers a 401(k) plan and allows incoming rollovers, this can be a good option if you like the investment choices and fee structure of the new plan.
Option B: Roll Over to an Individual Retirement Account (IRA): This is a very popular choice as it often provides the most flexibility in terms of investment options and can sometimes have lower fees. You'll need to decide between a Traditional IRA (for pre-tax money) or a Roth IRA (if you want to pay taxes now and have tax-free withdrawals in retirement, typically for Roth 401(k) contributions).
Option C: Leave Your Money in the Lincoln Financial 401(k): If you're happy with the investment options, fees, and services provided by Lincoln Financial, and your plan allows it, you might choose to leave your money where it is. This is often the simplest option, especially for smaller balances. Be aware that some plans may force out small balances (e.g., under $5,000) if you leave employment.
Step 2: Gather Necessary Information and Documents
Once you've decided on your rollover destination, the next critical step is to gather all the necessary information about your current Lincoln Financial 401(k) and your chosen new account.
QuickTip: Revisit key lines for better recall.
From Your Lincoln Financial 401(k):
Account Statements: Have your most recent statements readily available. These will show your current balance, investment holdings, and account number.
Plan Administrator Contact Information: You'll need to contact Lincoln Financial directly. Have their customer service number for retirement plans handy.
Tip: You can usually find the correct contact number by logging into your Lincoln Financial online account or checking previous statements.
Type of Contributions: Determine if your 401(k) holds pre-tax contributions, Roth (after-tax) contributions, or both. This is crucial for choosing the correct IRA type (Traditional for pre-tax, Roth for Roth).
Any Outstanding Loans: If you have a loan against your 401(k), you'll need to understand the implications of rolling over before proceeding. Often, loans must be paid back or they become taxable distributions.
For Your New Account (IRA or New 401(k)):
New Account Information: If you're rolling over to a new IRA, you'll need the account number, routing number, and the full name and address of the financial institution (brokerage, bank, or robo-advisor).
Letter of Acceptance (LOA): Some plan administrators, including Lincoln Financial, might require a Letter of Acceptance from the receiving institution, confirming they will accept the rollover. Your new financial institution can typically provide this.
Investment Choices: If you're opening a new IRA, research and decide on your initial investment choices. This will help you allocate your funds once the rollover is complete.
Step 3: Initiate the Rollover Process with Lincoln Financial
This is where you make the official request to transfer your funds. Direct rollovers are highly recommended to avoid potential tax implications and penalties.
Sub-Step 3.1: Contact Lincoln Financial
Call Lincoln Financial's retirement plan customer service line. Explain that you wish to initiate a 401(k) rollover.
Be prepared to provide your account information and verify your identity.
Sub-Step 3.2: Specify a Direct Rollover
Crucially, request a direct rollover. This means the funds are transferred directly from Lincoln Financial to your new IRA or 401(k) provider without passing through your hands.
Why is this important? If the money is sent to you (an indirect rollover), Lincoln Financial is legally required to withhold 20% for federal taxes. You would then have 60 days to deposit the entire amount (including the 20% withheld, which you'd need to cover from other funds) into your new account to avoid taxes and potential penalties. Direct rollovers bypass this complexity.
Sub-Step 3.3: Complete Required Forms
Lincoln Financial will likely provide you with a "Request for a Rollover" form or similar distribution paperwork.
Carefully read all instructions and disclosures.
Fill out the form accurately, including the exact name and account number of your new receiving institution. Ensure the check (if applicable) is made payable to the new institution "FBO (For Benefit Of) [Your Name]."
Attach any required documentation, such as the most recent statement from your prior plan or a letter from your prior plan sponsor.
Pay attention to details: Small discrepancies in names (e.g., maiden name vs. married name, missing middle initial) can significantly delay the process.
QuickTip: Absorb ideas one at a time.
Sub-Step 3.4: Address Roth Contributions (if applicable)
If your Lincoln Financial 401(k) includes Roth contributions, ensure you specify that these funds be rolled over to a Roth IRA. Rolling Roth 401(k) funds into a Traditional IRA would trigger a taxable event.
Sub-Step 3.5: Spousal Consent (if applicable)
Some 401(k) plans require spousal consent for distributions or rollovers, even if you are the sole account holder. Lincoln Financial will inform you if this is necessary for your plan.
Step 4: Follow Up and Monitor the Transfer
The rollover process can take some time, typically 2-4 weeks. Patience and proactive monitoring are key.
Confirm Submission: After submitting your paperwork to Lincoln Financial, confirm with them that your request has been received and is being processed. Ask for an estimated completion timeframe.
Track the Transfer: If a check is being mailed, understand if it's being sent to you (in which case you'll need to forward it immediately to your new institution with your new account number clearly written) or directly to your new financial institution.
Verify Receipt: Contact your new IRA or 401(k) provider to confirm they have received the funds.
Invest Your Funds: Once the funds are in your new account, they will likely be held in a money market or settlement fund. You will then need to actively invest them according to your chosen investment strategy. Don't forget this crucial step!
Step 5: Confirm and Retain Records
Once the rollover is complete, a final verification and record-keeping step is essential.
Final Statement from Lincoln Financial: You should receive a final statement from Lincoln Financial showing a zero balance (or the remaining balance if you only rolled over a portion).
Confirmation from New Provider: Your new financial institution should provide a statement or online confirmation showing the incoming rollover and the funds invested.
Tax Form 1099-R: In the following tax year, you will receive a Form 1099-R from Lincoln Financial. This form reports the distribution from your 401(k). It's crucial that this form indicates a direct rollover (Code G in Box 7) if that's what you executed, or Code H for a direct rollover of a Roth 401(k) to a Roth IRA. If it shows a taxable distribution, contact Lincoln Financial immediately to rectify it.
Keep Records: Maintain thorough records of all correspondence, forms, and statements related to the rollover for your tax records.
Frequently Asked Questions (FAQs)
How to initiate a direct rollover from Lincoln Financial?
To initiate a direct rollover, contact Lincoln Financial's retirement plan customer service and explicitly request a direct rollover to your new financial institution. They will provide the necessary forms.
QuickTip: Keep going — the next point may connect.
How to avoid taxes and penalties during a 401(k) rollover?
Always opt for a direct rollover to avoid the mandatory 20% federal tax withholding and potential early withdrawal penalties. If you receive a check, ensure it's made payable directly to the new institution "FBO [Your Name]".
How to find my Lincoln Financial 401(k) account number?
Your Lincoln Financial 401(k) account number can typically be found on your periodic account statements or by logging into your online account on the Lincoln Financial website.
How to choose between a Traditional IRA and a Roth IRA for my rollover?
Roll over pre-tax 401(k) funds to a Traditional IRA to maintain tax-deferred growth. Roll over Roth 401(k) funds to a Roth IRA to maintain tax-free withdrawals in retirement. If you convert pre-tax funds to a Roth IRA, you will owe income taxes on the converted amount in the year of conversion.
How to handle an indirect rollover if I accidentally receive the check?
If you receive the check directly, you must deposit the entire amount (including the 20% that was withheld for taxes, which you'll need to cover from other funds) into a new qualified retirement account within 60 days to avoid taxes and penalties.
How to find out about fees associated with my Lincoln Financial 401(k)?
QuickTip: A quick skim can reveal the main idea fast.
Information on fees for your Lincoln Financial 401(k) plan is usually provided in your plan's disclosure documents, annual statements, or by contacting Lincoln Financial customer service directly.
How to ensure my spousal consent is obtained for the rollover?
Lincoln Financial will inform you if spousal consent is required for your specific plan. If so, they will provide the necessary forms that your spouse must sign, often requiring notarization.
How to track the status of my Lincoln Financial 401(k) rollover?
You can usually track the status of your rollover by logging into your Lincoln Financial online account or by calling their customer service line for updates. You should also confirm receipt with your new financial institution.
How to invest my funds after the rollover is complete?
Once the funds are in your new IRA or 401(k), log into your new account and choose your desired investments (e.g., mutual funds, ETFs, stocks) from the options available. Don't leave your money sitting in a low-interest settlement fund!
How to get a Form 1099-R for my Lincoln Financial 401(k) rollover?
Lincoln Financial will typically mail you a Form 1099-R by January 31st of the year following your rollover. If you don't receive it, contact their customer service to request a copy. Ensure Box 7 has code 'G' (for direct rollover) or 'H' (for direct Roth rollover).
 |
