It's a common financial milestone: you've left a job, and now you're wondering what to do with that 401(k) account you had with your former employer, managed by Empower. Closing an Empower 401(k) account isn't like closing a regular bank account; it involves important decisions about your retirement savings and significant tax implications. But don't worry, we're here to guide you through it!
Are you ready to take control of your retirement future? Let's dive into the step-by-step process of how to close your Empower 401(k) account.
Navigating Your Empower 401(k) Account Closure: A Comprehensive Guide
Closing your Empower 401(k) account generally means distributing the funds within it. This isn't necessarily about "cashing out" in the traditional sense, though that is one option. More often, it involves transferring your funds to another qualified retirement account to maintain their tax-deferred or tax-free growth.
Step 1: Understand Your Options (and Don't Rush!)
Before you even think about picking up the phone or logging in, it's crucial to understand the various paths you can take with your 401(k) funds. This isn't a decision to be made lightly, as it can have long-term impacts on your retirement security and immediate tax consequences.
Sub-heading: Why Knowing Your Options Matters
Many people simply cash out their 401(k)s when they leave a job, often without fully understanding the hefty taxes and penalties involved. Don't be one of them! Taking a lump-sum distribution (cashing out) can mean losing a significant portion of your hard-earned savings to income taxes and a 10% early withdrawal penalty if you're under 59½.
Here are your primary options when you leave an employer and have an Empower 401(k):
Leave it with Empower (in your former employer's plan): This is often the simplest option in the short term. Your money remains invested with Empower under your old plan's rules. However, if your balance is small (often under $5,000), your former employer might automatically "force out" the funds by rolling them into an IRA for you or even issuing you a check.
Roll over to a new employer's 401(k): If your new employer offers a 401(k) and allows rollovers, this can be a good choice for consolidating your retirement savings in one place. It keeps your money in a qualified plan, maintaining tax advantages and potentially strong creditor protections.
Roll over to an Individual Retirement Account (IRA): This is a very popular option. Rolling your 401(k) into a Traditional IRA or Roth IRA (if eligible and you understand the tax implications of a Roth conversion) gives you more control over your investments and often a wider range of investment choices compared to a 401(k).
Take a lump-sum distribution (cash out): As mentioned, this is generally not recommended unless absolutely necessary due to the significant tax implications and potential early withdrawal penalties.
Step 2: Gather Necessary Information
Once you have a general idea of your preferred option, you'll need to gather some essential information. This will make the process smoother and help you fill out any required forms accurately.
Sub-heading: Key Documents and Details to Have Ready
Your Empower Account Information: This includes your account number, login credentials for the Empower website (empowermyretirement.com), and any personal identification numbers (PINs) or security questions.
Former Employer Details: The name of your former employer, their plan number (if you know it), and the date you separated from employment.
New Account Information (if rolling over): If you're rolling over to a new 401(k) or IRA, you'll need the account number and routing information for the new account, as well as the name of the new financial institution.
Personal Identification: Your Social Security Number (SSN) or Taxpayer Identification Number (TIN), and your date of birth.
Contact Information: Your current mailing address, phone number, and email address. Ensure your address on file with Empower is up-to-date as checks (if applicable) will be sent to the address on file. You can often update this by logging into your Empower account or calling them.
Step 3: Contact Empower (or Your Former Employer's HR)
This is where the actual process of initiating the closure begins.
Sub-heading: Making Initial Contact
While you can often find information and forms online, it's frequently beneficial to speak directly with an Empower representative or your former employer's HR department. This is especially true if you have specific questions about your plan's rules, vesting, or loan status.
Empower's Participant Services: You can typically reach Empower's participant services by phone. Their contact number is often found on your statements or by searching "Empower Retirement contact us" online. A common number is 1-800-338-4015. Be prepared for security questions to verify your identity.
Former Employer's HR/Benefits Department: Your former employer's HR or benefits department can also provide specific plan documents, details on their 401(k) withdrawal/rollover procedures, and confirm your separation date. They may also be able to provide the specific forms you need.
Step 4: Request and Complete the Necessary Forms
Empower will require you to complete specific forms to process your distribution. These are often called "Separation from Employment Withdrawal Forms" or similar.
Sub-heading: Filling Out the Forms Accurately
Obtaining the Forms: You can usually download these forms from the Empower website after logging in, or they may be sent to you by mail after your initial contact. Your former employer's HR might also provide them.
Read Instructions Carefully: Do not skip this step! These forms often come with detailed instruction guides. Read them thoroughly to understand each section and avoid common errors.
Complete All Required Sections: Fill in all requested personal information, account details, and, most importantly, your withdrawal instructions.
Reason for Withdrawal: You'll need to indicate the reason (e.g., separation from employment).
Loan Status: If you have an outstanding 401(k) loan, this is critical. Unless you explicitly choose to leave your loan active (if your plan allows this for former employees), your outstanding loan balance and accrued interest will likely be treated as a taxable withdrawal, potentially incurring taxes and penalties. Many plans require you to repay the loan in full upon leaving employment.
Distribution Type: This is where you specify your chosen option:
Direct Rollover: If rolling over, you'll need the exact name of the new institution and the new account number. The check will be made payable directly to the new financial institution (e.g., "Fidelity Investments FBO [Your Name]"). This is the preferred method to avoid tax withholding and the 60-day rollover rule.
Indirect Rollover: If you choose to have the check made payable to you, Empower will typically withhold 20% for federal taxes. You then have 60 days from receiving the check to deposit the full amount (including the 20% withheld, meaning you'd need to come up with that portion from other funds) into a qualified retirement account to avoid the remaining tax liability and potential penalties. This method carries more risk and is generally not recommended.
Lump-Sum Cash Distribution: If you choose to cash out, indicate the full amount or a partial amount. Be aware of the tax implications.
Sign and Date: Ensure all required signatures and dates are present. Some forms may require a Medallion Signature Guarantee, which is a special type of signature guarantee provided by banks and other financial institutions, primarily to prevent fraudulent transfers of securities. If required, Empower will specify this.
No White-Out: Any changes or corrections on the form should be crossed out and initialed, not whitened out. Incorrectly filled forms may be returned, causing delays.
Step 5: Submit Your Forms and Supporting Documentation
Once your forms are meticulously completed, it's time to send them to Empower.
Sub-heading: Methods of Submission
Online Upload: Empower often provides an option to upload documents securely through their website after you log in. Look for a "Upload Documents" or similar section. This is usually the fastest method.
Mail (Regular or Express): You can mail the forms to the address provided on the form itself. Consider using a trackable mailing service (e.g., certified mail, FedEx, UPS) for important documents like these, especially if sending physical checks or highly sensitive information.
Fax: Some forms may allow fax submission, but confirm with Empower if this is an acceptable method for your specific request.
Sub-heading: What to Expect After Submission
Confirmation: Empower should send you a confirmation that they received your request.
Processing Time: Processing times can vary, typically from a few business days to a couple of weeks, depending on the complexity of your request and their current volume.
Status Updates: You can often check the status of your withdrawal request by logging into your Empower account. You may also be able to sign up for email or text updates.
Approval: In some cases, your former employer (the plan sponsor) may need to approve the distribution before Empower can fully process it.
Step 6: Confirm the Transfer or Distribution
Once Empower has processed your request, you'll want to verify that the funds have been successfully moved or distributed as you intended.
Sub-heading: Verifying Your Funds
Direct Rollover: Check your new 401(k) or IRA account to ensure the funds have been received and correctly allocated. This may take a few more days after Empower processes the request.
Cash Distribution: If you opted for a cash distribution, expect a check to be mailed to your address on file. Deposit it as soon as possible.
Tax Forms: Regardless of your chosen method, Empower will send you a Form 1099-R for tax purposes in the following tax year, reporting the distribution. Keep this document for your tax records. If it was a direct rollover, the taxable amount should be $0.
Step 7: Update Beneficiaries (if applicable)
If you rolled your funds over to a new IRA or 401(k), remember to update your beneficiaries on that new account. Your beneficiaries from your old Empower 401(k) do not automatically transfer.
Sub-heading: Ensuring Your Legacy
Log in to your new account: Navigate to the "Beneficiaries" or "Profile" section.
Designate or Update: Clearly name primary and contingent beneficiaries for your new retirement account. This ensures your assets go to the people you intend in the event of your passing.
Frequently Asked Questions (FAQs) - Empower 401(k) Account Closure
Here are 10 common "How to" questions related to closing an Empower 401(k) account, with quick answers:
How to check my Empower 401(k) account balance?
You can check your Empower 401(k) account balance by logging into your account at empowermyretirement.com.
How to find my old Empower 401(k) account if I don't have the login details?
If you don't have your login details, you can try using the "Forgot Username" or "Forgot Password" links on the Empower login page. If that doesn't work, contact Empower's participant services directly at their general customer service number (often 1-800-338-4015) and be prepared to verify your identity.
How to initiate a direct rollover from Empower to another IRA?
To initiate a direct rollover, contact Empower or download their "Separation from Employment Withdrawal Form." On the form, indicate you want a direct rollover to an IRA and provide the receiving IRA's institution name and account number. The check will be sent directly to the new institution, avoiding tax withholding.
How to avoid taxes and penalties when closing my Empower 401(k)?
The best way to avoid taxes and penalties is to perform a direct rollover of your funds into another qualified retirement account, such as a Traditional IRA or a new employer's 401(k).
How to deal with an outstanding 401(k) loan when closing the Empower account?
If you have an outstanding loan, many plans require it to be paid in full upon leaving employment. If you cannot repay it, the outstanding balance will likely be treated as a taxable distribution, subject to income taxes and a 10% early withdrawal penalty if you're under 59½. Check your specific plan rules or speak with Empower.
How to get a hardship withdrawal from my Empower 401(k)?
Hardship withdrawals are typically only available under specific, IRS-defined "immediate and heavy financial needs" (e.g., medical expenses, preventing eviction/foreclosure, tuition). You'll need to apply and provide documentation, and they are generally subject to income tax and a 10% penalty if you're under 59½. Contact Empower for their hardship withdrawal forms and requirements.
How to update my mailing address with Empower?
You can typically update your mailing address by logging into your Empower account online. Look for "Profile," "Account Settings," or "Personal Information." If you cannot do it online, call Empower's customer service.
How to confirm my 401(k) funds have been successfully rolled over?
After Empower processes your rollover request, check the receiving IRA or new 401(k) account's balance and transaction history. It may take a few extra business days for the funds to appear in the new account.
How to find out if my small Empower 401(k) balance will be automatically disbursed?
If your 401(k) balance is small (often under $5,000), your former employer's plan may have a provision for "force-out" distributions. Contact Empower or your former employer's HR department to inquire about their specific policy for small account balances after separation from employment.
How to contact Empower Retirement for further assistance?
You can contact Empower Retirement's Participant Services by phone. A common number for general inquiries is 1-800-338-4015. You can also find additional contact information and email options on the "Contact Us" section of the Empower Retirement website.