Rolling over an ADP 401(k): Step-by-step guide

If you have a 401(k) retirement plan at ADP, Inc. from a former employer, there are a few options for you to consider when doing a rollover. The retirement plan rollover process for ADP can be done either online, by phone, or by mailing a form and a check will be mailed for you to deposit into the new account.

We’ve laid out an easy-to-follow, five-step guide to help you roll over your old ADP 401(k):

1. Confirm a few key details about your 401(k) plan
2. Decide where to move your money
3. Initiate your rollover with ADP retirement services 
4. Get a check in the mail and deposit it into the new account
5. Make sure your funds are being invested properly

What is a 401(k) rollover?

A 401(k) rollover is the technical term for transferring money from an old 401(k) employer’s plan to another retirement account. Most people who roll over end up transferring their 401(k) savings into a new or existing IRA (individual retirement account), but there are various types of retirement accounts that can receive a 401(k) rollover.

STEP 1

Confirm a few key details about your ADP 401(k)

First, get together all the information you have on your ADP 401(k). It’s okay if you don’t have a ton, but any details like an old account statement or an off-boarding e-mail from your former HR team or plan administrator can help. Some 401(k) paperwork can be confusing, but don’t worry—you just need to focus on a few items.

Is your account eligible for a rollover?

In most cases, it takes about two weeks from the time you leave a company for your 401(k) to be eligible for a distribution or rollover. You can confirm that your plan assets are ready to be transferred by contacting ADP or your previous employer’s HR department.

Do you have a Traditional or Roth 401(k)?

This will determine which type of IRA you’ll need to open (more on this in step 2). If you’re like most people, you have a traditional 401(k); only 12% of 401(k) plans even offer a Roth 401(k), but it’s worth checking. What’s the difference between the two? Simply put, the tax structure. With a traditional 401(k) your contributions come out of your paycheck with no taxes paid (tax-deferred). With a Roth 401(k) your contributions come out after taxes are paid to the IRS.

Is your mailing address up to date?

Make sure your mailing address is updated on your ADP 401(k) account. They’ll use this address to send your retirement funds as a paper check as part of the rollover process. If you need to update your address, make sure to do so during your phone call authorization (more in step 4).

STEP 2

Decide where to transfer your ADP 401(k)

In order to move retirement funds out of your 401(k) account, you’ll first need to have an account opened for that money to move into.

You have two main options:

1. An IRA — an IRA is an individual retirement account. As their name suggests, IRAs are retirement accounts you can open on your own—you don’t have to be an employee to have one.
2. A new 401(k) — you might have an active 401(k) account with a new employer. If so, you may be able to transfer your old 401(k) retirement funds into that account—but this isn’t always possible, so you’ll need to check with your current plan provider and HR person.

We’ve written a full guide on the five key differences between 401(k)s and IRAs if you’re trying to understand all of the differences between qualified retirement plans. Some people may consider an “early withdrawal” or cash out of their retirement savings into a non-retirement account, but be aware that doing so has tax implications and is also subject to an early withdrawal penalty.

Ultimately, most people who roll over an old 401(k) do so into an IRA for a few key reasons:

• Not tied to an employer — IRAs are generally easier to keep track of since you open them yourself at an institution of your choice like Fidelity, Vanguard, or Betterment. In other words, you can keep these accounts regardless of your employee status.
• A wider range of investment options — your 401(k) account generally has a limited set of investment options, usually comprised of only mutual funds. With an IRA, you can invest your retirement assets in a wide range of stocks, ETFs, and even private assets like angel investments and cryptocurrency, which can increase diversification.
• Quicker process — according to the GAO, rollovers into 401(k)s tend to be more time-consuming and administratively challenging than rollovers into IRAs.

Think of your IRA as helping you achieve two main goals:

1. Receive the money you’ve saved in your 401(k) at previous jobs so you can consolidate your savings and keep track of them.
2. Grow that money by allocating it to investments that will increase over time.

The good news? Opening an IRA can almost always be done online and should take you less than 10 minutes if you don’t already have one.

How do I choose an IRA provider?

Many financial institutions offer IRAs, including brokerage firms, banks, and newer fintech companies. In order to pick the best account for you, there’s one up-front question to answer:

Do you want to make your own investment decisions, or would you rather have the investing decisions made for you so you can just set it and forget it?

If you want to make your own decisions, then what you’ll want is a self-directed IRA. That allows you to make your own trading decisions and invest in whichever financial securities you’d like.

If you want the investment decisions made for you, then you’ll be best served by an automated IRA, also known as a robo-advisor account. Here you’ll answer a series of questions (known as a risk-tolerance questionnaire), and your answers will be used to create a diversified portfolio that suits your personal and financial situation. That portfolio is then rebalanced automatically over time without you having to do any work. It’s a great tool for those who don’t want to spend much time managing their investments.

What type of IRA should I open?

During the process of opening your new account, you may get asked which type of IRA you’d like to open. You might see the following rollover options: rollover IRA, traditional IRA, or Roth IRA. Here’s how to pick the right one:

• If you had a Traditional 401(k) — pick a rollover IRA or, if that’s not available, traditional IRA—or, if that’s not available, either, just IRA. The only exception would be if you’re considering a Roth conversion, but this is an advanced tax planning strategy that most people don’t need to worry about.
• If you had a Roth 401(k) — pick a Roth IRA. You’ll need to match the Roth 401(k) to a Roth IRA for tax reasons. This is common when rolling over a Roth 401(k) to a Roth IRA.
• If your 401(k) has mixed assets — you’ll need to open two IRAs, one Roth and one Traditional for their respective assets.

STEP 3

Initiate your ADP 401(k) rollover

You’re making great progress! You’ve confirmed key details about your 401(k) plan and you have an IRA to transfer your money into. The next step is to initiate your rollover with ADP. ADP has three methods for requesting a rollover to another institution:

1. Online through your ADP account
2. By filling out ADP’s rollover authorization form
3. By calling ADP

Authorize via online process

Your plan may allow you to complete the rollover initiation process online. This can be a fast and convenient way to get your rollover started without having to mail any paperwork or make phone calls. You’ll want to confirm that the mailing and contact information on your account is correct so that your online submission is accurate. If you aren’t sure, you always have the option of initiating over the phone.

To start, log in to your ADP online account. Look for an option like “move assets”, “roll over money”, or “start a distribution”. These options can sometimes be hidden under an “actions” or “withdrawal” menu.

Ultimately, the option you want to select should explicitly say “roll over,” and you’ll often need to specify that you want to move your funds “out of the plan” or “to another institution”.

Two other important tips to keep in mind while going through the online process:

1. Opt for a direct rollover into an IRA at another institution — this’s easier and has fewer tax implications than an indirect rollover.
2. You may be asked how much of your balance you want to roll over. It’s easiest to do a full rollover so you don’t leave any money behind.

Authorize via Form

Rolling over via form allows you to avoid a potentially lengthy phone call, but if the document is rejected for any reason, it can prolong the process overall. If you’ve confirmed that your mailing address and contact information on your account is correct and that your plan is eligible for a rollover, initiating your rollover via the form is worth considering. If you aren’t sure, you may want to initiate your rollover over the phone to avoid any processing issues.

You can request the ADP rollover distribution form by calling ADP directly. Once you have the form, you’ll need to fill out, sign, and send it back to ADP by mail or fax. The mailing address and fax number can be found at the end of the form.

Authorize via Phone

If you prefer to speak to an ADP representative to make sure everything is good to go, you can also initiate your rollover over the phone. Contacting ADP directly over the phone allows you to correct any issues on your account, update your mailing address, and initiate the rollover all in one go. ADP’s phone number should be visible on an old account statement, website, or on the distribution form.

In order for your call to go smoothly, follow these tips:

1. Set aside 30 minutes and a quiet space in which to make the call. Most of the time the call itself will take around 10 minutes, but there can often be a waiting time before you’re connected to an operator.
2. If you have an old 401(k) statement, keep it handy. No worries if not — you’ll be asked for your social security number and some other personal details to verify your identity.
3. Before you do the call, log into your new IRA account. Note down the following information:
   • Your IRA account number
   • Any other check-related instructions. These details are usually found on the IRA provider’s website in a “Funding” or “Rollover instructions” section and include things like the name of the institution to whom the check is made out (usually the full legal name of the IRA provider you’ve chosen).

Then place the call. Be prepared for a short hold time, but in our experience, the entire call should take no longer than half an hour.

Don’t forget to confirm your mailing address during the call. ADP will mail your rollover check to the address they have on file. If you need to update your address with them, just let the ADP rep know during the call and provide your current address.

What do I request on the call?

After your identity is verified, you’ll be able to tell the customer service representative that you want to do a direct rollover. A direct rollover is where your funds are directly transferred to your new IRA provider.

An indirect rollover is where funds are first transferred to you, or a check is made out in your name. You deposit the funds in one of your own accounts, but then you have 60 days to send that money on to your IRA account if you want the rollover to be tax-free. In short, an indirect rollover creates a little extra work for you—and potentially comes with expensive fees and tax implications if you don’t meet the deadline.

STEP 4

ADP will only distribute your 401(k) account balance directly to you, using the mailing address they have on file for your account. Once you get the check, it’s then up to you to deposit that check with your new IRA provider.

There are a few ways you can deposit your check depending on the provider:

• Mobile deposit — the easiest option is to check your provider’s mobile app to see if they have a mobile deposit option. If your provider offers mobile deposit, it typically takes 3-5 business days to show up in your account.
• Deposit in person at a local branch — if your provider has a physical branch nearby, you can also deposit the check in person. Checks deposited in person typically take 3-5 business days to show up in your account.
• Send the check by mail — you can also send the check by mail to the provider using the address you previously looked up. Funds that are mailed can take up to 15 business days to show up in your account.

STEP 5

Invest with your IRA appropriately

Remember there are two goals of rolling over an old 401(k) into an IRA — the first is to consolidate your 401(k) assets, and the second is to grow those plan assets by allocating them into investment options that will increase in value over time.

Your very last step in executing a rollover is to make sure that the second goal is being met and that the funds in your IRA are being appropriately invested. If you chose an automated IRA then this should happen automatically. That’s because as soon as your funds arrive they’ll be allocated into a portfolio that was created for you during the sign-up process for your new IRA account. You should still log in and check to make sure that’s the case, but usually, there’s nothing more for you to do.

If you choose a self-directed account then you’ll have to invest the retirement savings and pick the allocation yourself. Often the simplest option is to purchase a target-date retirement fund — this is an investment vehicle that puts your money into a combination of higher-risk, higher investment return stocks and lower-risk, lower-return bonds. The exact mix changes as you age so that you have more stocks when you’re younger and less as you get older: because stocks generate higher returns but are more volatile we should own more of them early on when we can withstand their fluctuations in order to achieve their higher long-term returns.

Otherwise, you can assemble a portfolio on your own by making trades.