Ready to take control of your retirement savings? If you've been holding a 401(k) with Empower and are considering moving it to Vanguard, you're making a smart move towards consolidating your accounts and potentially accessing a wider range of low-cost investment options. A 401(k) rollover might seem like a daunting process, but it's simpler than you think. Let's walk through it together, step-by-step.
Step 1: Get Your Ducks in a Row (and Engage with Your Finances!)
Before you do anything, let's gather all the necessary information. Think of this as a financial reconnaissance mission. This is your money, your future—so let's make sure we have all the right intel.
Who is your 401(k) provider? In this case, it's Empower. Do you have your account number handy? If not, you can find it on a recent statement or by logging into your Empower account online.
What type of 401(k) do you have? Is it a Traditional 401(k) (pre-tax contributions) or a Roth 401(k) (after-tax contributions)? This is critically important because it determines the type of IRA you will open at Vanguard. A Traditional 401(k) rolls into a Traditional or Rollover IRA, and a Roth 401(k) rolls into a Roth IRA.
What is your balance? Having an estimate of your account value is always a good idea.
Do you have any outstanding 401(k) loans? If you do, you'll need to pay them off before you can roll over the account. This is a non-negotiable step.
Now, take a deep breath. You've got the information you need. Let's move on to setting up your new home for these funds at Vanguard.
 |
| How To Transfer 401k From Empower To Vanguard |
Step 2: Open Your Vanguard Rollover IRA
This is where you'll create the destination for your money. If you don't already have an account with Vanguard, you'll need to open one. It's a straightforward process that can be done online.
Sub-heading: Choosing the Right Account Type
As mentioned in Step 1, the type of account you open depends on your 401(k) type.
For a Traditional 401(k): Open a Rollover IRA or a Traditional IRA. A "Rollover IRA" is essentially a Traditional IRA designated for rollovers. This is the preferred choice, as it helps track the source of the funds and can make it easier to roll the money into a new employer's plan in the future if needed.
For a Roth 401(k): Open a Roth IRA. It's crucial to roll Roth money into a Roth IRA to maintain its tax-free withdrawal status in retirement.
If you have both: If your 401(k) has both Traditional and Roth contributions, you will need to open both a Traditional/Rollover IRA and a Roth IRA at Vanguard. You will then need to instruct Empower to split the funds during the transfer.
Pro-Tip: If you're unsure which type of 401(k) you have, check your Empower statements or contact their customer service before you proceed. Getting this wrong can have serious tax consequences.
QuickTip: Keep a notepad handy.
Step 3: Initiate the Rollover with Empower
Now for the main event: contacting Empower to request the transfer. The most common and recommended method is a direct rollover. This means the money is sent directly from Empower to Vanguard, which prevents any tax withholding and simplifies the process for you.
Sub-heading: Making the Call or Using the Online Portal
By Phone: Set aside about 30 minutes for this call. Have your Empower account information and your new Vanguard account number handy. Call Empower's customer service line. You can often find this number on your account statement or their website.
Online: Many providers, including Empower, now offer the option to initiate a rollover through their online portal. Look for a section on "Withdrawals," "Distributions," or "Rollovers." This can be a very quick and efficient way to start the process.
Sub-heading: What to Say and What to Ask
Once you connect with a representative or navigate the online system, clearly state that you want to perform a direct rollover of your 4-0-1-k to a rollover IRA at Vanguard.
They will ask for Vanguard's information. You'll need to provide:
Vanguard's Name: The Vanguard Group, Inc. or Vanguard Fiduciary Trust Company (depending on their requirements).
Vanguard's Mailing Address: You will need to get the correct mailing address for rollover checks. A quick search or a call to Vanguard's customer service can provide you with the most up-to-date address. A common address for checks is:
By U.S. Mail: Vanguard, P.O. Box 982901, El Paso, TX 79998-2901
By Registered, Certified, or Overnight Mail: Vanguard, 5951 Luckett Court, Suite A1, El Paso, TX 79932-1882
Your Vanguard Account Number: Provide the full account number for your new Rollover IRA.
Crucially, specify the check should be made payable to "Vanguard FBO [Your Name]." FBO stands for "For the Benefit Of." This is the key to a direct rollover and prevents any tax withholding.
Be sure to confirm your mailing address with the Empower representative, as they will often mail the check directly to you for you to then forward to Vanguard. This is a common practice and is still considered a direct rollover as long as the check is made out to Vanguard FBO your name.
Step 4: The Waiting Game and Final Transfer Steps
Once Empower processes your request, you'll enter the waiting period. This can take anywhere from a few days to a couple of weeks.
Track the check. If they are mailing you the check, keep an eye on your mail. The check will be sent to the mailing address you have on file with Empower.
Deposit the check promptly. As soon as you receive the check, you need to deposit it into your Vanguard account. You can do this via:
Vanguard's mobile check deposit app: This is often the fastest and most convenient method.
Mail: Use a reliable mail service and send the check to the appropriate Vanguard address you noted in Step 3.
Do not cash the check yourself! This would be considered an indirect rollover and can trigger a mandatory 20% tax withholding and a 10% early withdrawal penalty if you are under 59½. You have a 60-day window to complete an indirect rollover without penalty, but it's a complication you should avoid if possible.
QuickTip: Look for repeated words — they signal importance.
Step 5: Invest Your Funds!
Congratulations! Your money has successfully been transferred to Vanguard. The funds will initially be in a money market or settlement account.
Log in to your Vanguard account. Once the funds have cleared, you will see the balance in your account.
Choose your investments. The money is sitting in cash, so it's not growing. You need to actively invest it. This is one of the biggest advantages of moving to Vanguard—access to their legendary low-cost index funds and ETFs.
Consider a target-date fund or build a diversified portfolio of index funds like VTSAX (Vanguard Total Stock Market Index Fund) and VBTLX (Vanguard Total Bond Market Index Fund).
Set up automatic investing to continue your retirement savings journey with Vanguard.
By following these steps, you will have successfully navigated the process of transferring your 401(k) from Empower to Vanguard, setting yourself up for a more streamlined and cost-effective retirement savings strategy.
Frequently Asked Questions (FAQs)
How to tell if I have a Traditional or Roth 401(k)?
Check your plan statements from Empower. They will clearly label your contributions as either "Pre-Tax" (Traditional) or "Roth" (After-Tax).
How to find my Empower 401(k) account number?
You can find it on any recent account statement or by logging into your Empower online portal. It is typically displayed prominently on your account summary page.
QuickTip: Skip distractions — focus on the words.
How to contact Empower for a rollover?
You can log in to your account and look for distribution options, or you can call their customer service line. The number can usually be found on their website or your statements.
How to get Vanguard's direct rollover mailing address?
The most reliable way is to call Vanguard's Personal Investor Services at 877-662-7447 or check their website's "Forms and Literature" section for the most current mailing instructions for rollovers.
How to use Vanguard's mobile check deposit?
Download the Vanguard app, log in, and look for the "Mobile check deposit" option. You'll simply take a picture of the front and back of the check and follow the on-screen instructions.
How to avoid paying taxes on my rollover?
Request a direct rollover, where the check is made payable to "Vanguard FBO [Your Name]." This ensures the money never touches your hands in a way that triggers tax withholding.
Tip: Read slowly to catch the finer details.
How to know if my rollover is complete?
You can track the progress of the check in the mail, and you will see the funds appear as a deposit in your Vanguard account once it's processed. Vanguard also has a "Track Your Transfer" feature in their online portal.
How to invest the money once it's at Vanguard?
Once the funds are in your Vanguard settlement fund, you need to manually purchase the investments you want. Log in to your account and go to the "Buy & Sell" or "Trade" section to select your desired funds.
How to roll over only a portion of my 401(k)?
Yes, you can request a partial rollover. You'll need to specify the exact amount you want to transfer when you initiate the request with Empower.
How to handle an indirect rollover if I receive a check made out to me?
If Empower sends you a check made out to you, you have 60 days from the date you receive it to deposit the full amount into your Vanguard IRA. If you don't, it will be considered a taxable distribution and a penalty may apply. You'll also need to make up for the 20% federal tax withholding from other sources to deposit the full amount.
 |
