How to Roll Over a T. Rowe Price 401(k)

For any number of reasons, you may be considering rolling over your T. Rowe Price 401(k) plan to another account, another provider, or both. The T. Rowe Price 401(k) is a well-regarded employer-sponsored plan that lends itself to T. Rowe Price’s proprietary products. For most people, these funds are more than sufficient, but you may still be considering rolling over your plan if you change jobs.

A job change tends to be both exciting and stressful. Most big decisions often are. Even if you’re careful with your finances, it can be easy to lose track of a T. Rowe Price 401(k) — this also applies to accounts you may have at other financial institutions.

Here, we’ll be learning more about your rollover options as they relate to your T. Rowe Price 401(k), and we’ll also be providing guidance as to how to roll over your T. Rowe Price 401(k) in a hassle-free (and ideally tax-free) way.

Top Benefits of Rolling Over Your T. Rowe Price 401(k)

Rolling over your 401(k) can have many benefits. Among them:

• Streamlined account management. Rolling over your 401(k) tends to make it easier to manage your finances. Having your accounts under at a single financial institution makes them easier to track. What’s more, you’ll also have an easier time managing your investments if they’re all located at one provider.
• A centralized view of your investments. It’s generally easier to make asset allocation decisions when you have your investments under one roof. This way, no account is left behind when determining your optimal asset mix.
• Ongoing tax-deferred growth potential. When you move your T.Rowe Price 401(k), whether it’s to another 401(k) plan or to a rollover IRA, you’ll maintain tax-advantaged status for your retirement savings. A direct rollover completed properly should result in no federal income tax due.
• More investment options. If you decide to move your 401(k) to an IRA, you’ll have significantly more investment choices than if you were to leave your plan as it is. IRAs allow access to individual stocks, bonds, ETFs, and in some cases, even cryptocurrency. Take some time to review your current plan’s mutual fund prospectus list to see if the funds are a match for you.

Does T. Rowe Price have a Rollover IRA?

A rollover IRA, or Individual Retirement Account is one of the most popular options for those looking to roll over their old employer’s retirement plan. T. Rowe Price happens to have a rollover IRA as part of their product offering, so you wouldn’t have to change providers if you’re satisfied with T. Rowe Price as a financial institution and/or broker.

IRAs can make sense if you want to invest in single stocks, single bonds, ETFs, or, in certain cases, even cryptocurrency. As a point of note, you won’t be able to invest in cryptocurrency directly if you decide to open a Rollover IRA at T. Rowe Price.

If you’re happy with the T. Rowe Price service offering, you can roll your pre-tax 401(k) to a traditional IRA at T. Rowe Price without any tax consequence. The key is to make sure you open up a traditional IRA (which can also be a rollover IRA) rather than a Roth IRA — this keeps the tax treatment between your pre-tax 401(k) and your IRA consistent.

T. Rowe Price 401(k) Rollover Options

If you’ve made the decision to change jobs, you’ll also need to make a decision around what to do with your old 401(k) plan. It’s entirely possible that you’ve moved on to a new job with a new 401(k), or you might be taking some time off from work. Either way, you’ll need to make a call on your old employer’s retirement plan.

It may be the perfect time to consolidate since, over the course of your working career, you may have one or more workplace retirement plans located at different financial institutions. Take the opportunity to really give some thought to your financial planning.

Below, we’ll help you make a thoughtful decision about what to do with your old 401(k) plan, and run through the options they’ll have if they choose to work with T. Rowe Price.

Stay in your plan

If your old 401(k) plan allows, you may be able to leave your retirement assets right where they are — without incurring current income taxes (and/or early withdrawal penalties). This tends to be a workable option if you’re satisfied with the T. Rowe Price investment options, and you have a clear grasp on how your old 401(k) plan fits in with your broader investment allocation.

This is the easiest option — since it doesn’t require you to do anything — but it does underscore the importance of being aware of your old plan’s existence.

Roll it over to an IRA account

There are important differences to consider between 401(k)s and IRAs. These include the range of investment options, fees and expenses, availability of services, and distribution rules.

401(k)s come with a set menu of investment options from which to choose. IRAs, on the other hand, offer a much wider variety when it comes to investment selection. As an example, you’d be able to invest in single stocks inside an IRA; with a 401(k), generally only mutual funds and employer stock are available.

Some legacy 401(k) plans err on the expensive side, while most IRAs are low-cost or free. 401(k)s can have high administrative fees and investment expenses, both of which can eat into your returns over a long period of time.

Some IRAs, like automated IRAs from Betterment or Wealthfront, have more sophisticated investment management offerings (if you decide you need help with your investments). This is another consideration when it comes to evaluating the viability of an IRA in your financial plan.

In certain cases, you might decide to roll over your 401(k) to an IRA account to simply mark a clean break with your employer. This is a personal choice.

Roll it over to a new employer plan

If you’re fortunate enough to have found a new role with a new employer that also offers a 401(k) plan, check to see if your new employer’s plan accepts rollovers. If they do, you can move their money to your new plan without incurring current income taxes or penalties from the IRS.

This can be a good option if you aren’t impressed with T.Rowe Price’s 401(k) plan offering on troweprice.com, and have deemed your new employer’s plan to be superior. If so, consolidating makes a lot of sense, and can help you gain greater control over your investments in the context of your wider asset allocation.

Cash out

You can get immediate access to your retirement savings if you decide to cash out your 401(k). The major issue with this is not only will you be liable for federal, state, and local income tax on the entire amount of your distribution, but if you’re under 59.5, you’ll also incur a 10% early withdrawal penalty on the entire balance.

As compared to rolling your pre-tax money to a traditional IRA, cashing out your 401(k) plan stands to be significantly more expensive, and removes all potential for tax-deferred growth.

Needless to say, cashing out your 401(k) plan should be a last resort, and should only really be considered in a true emergency.

How To Begin The 401(k) Rollover Process

If you’ve decided that a 401(k) rollover is right for you, read on to learn how to make it happen.

1. Choose the account type you want

Your first decision has already been made: you’ve decided to roll over your 401(k). The next choice is the type of account to which you’ll transfer their funds.

Assuming you’re working with a tax-deferred 401(k) (and not a Roth 401(k)), your two realistic choices for rollover accounts are either your current tax-deferred 401(k) or a rollover IRA of your choice. This choice is heavily influenced by both your desired investment options and the costs associated with each account.

Be careful to evaluate your options. Consider the following questions:

• How does my new employer’s plan compare to the T. Rowe Price 401(k) plan?
• Do I want investment options beyond just mutual funds?
• Does my new employer’s plan accept roll-ins from outside providers?
• Would a new IRA provider offer ancillary services I value?

No matter which option you choose, if you’re working with pre-tax money, you’ll be subject to Required Minimum Distributions (RMDs) when you reach your early 70s. If you’re not sure how to choose an appropriate account type, or if you’re having trouble comparing options, we’re here to assist with big decisions like these.

2. Activate your account

Once you’ve made a choice about which account will receive the funds, make sure it’s activated and that you have the account type and account number available.

This information will come in handy later when you contact T. Rowe Price and request a rollover of your old 401(k) plan.

3. Start the rollover process

When you’re ready to initiate the rollover, contact T. Rowe Price (formally T. Rowe Price Investment Services, Inc.) and first have them locate your old 401(k) plan. To retrieve it, they may need certain pieces of identifying information, like:

• Your name, address, and former employer’s name
• Your old 401(k) plan account number and exact plan name (available on monthly or quarterly statements)
• The tax status of your old 401(k) plan (tax-deferred or after-tax)
• Your Social Security Number
• Your date of birth

There are two main options for transferring funds from T. Rowe Price to your new provider, if applicable. These include direct rollovers and indirect rollovers.

If it’s at all possible, it’s generally advised that a direct rollover is your best option for moving 401(k) funds around.

Direct rollovers simply involve transferring money from one financial institution to another — you never receive the money over the course of the transfer. Only two parties are involved: your old 401(k) plan administrator, and the company receiving the money.

With a direct rollover, your old 401(k) plan is liquidated, and an electronic transfer of funds is sent to the account you specify to T. Rowe Price.

Indirect rollovers, on the other hand, are a bit more complicated. With an indirect rollover, you’ll receive a check made out to you in the mail. The amount will be your entire 401(k) balance less withholding taxes.

You will then need to deposit the entire 401(k) balance, including withholding taxes to a new 401(k) or IRA within 60 days. If you fail to do this, the entire balance will be considered withdrawn, and you’ll be liable for both ordinary income tax as well as an early withdrawal penalty of 10% if you’re under the age 59.5. Whew!

This is why, in the grand majority of cases, we recommend moving money via direct rollover. This helps to avoid any unexpected tax or penalty traps.

4. Keep the process moving

If you’ve elected a direct rollover of your employer-sponsored plan, periodic follow-ups are often necessary to make sure the process is moving along smoothly. This can mean contacting T. Rowe Price to ensure the money has been sent, or it can mean contacting your new provider to make sure they’re on the lookout for an incoming funds transfer. Keep your brokerage account number handy in the event you need to provide it.

An eligible rollover distribution should come with no tax liability attached if you follow the provider’s rules carefully.

If you’ve elected an indirect rollover, you should do everything in your power to make sure the money makes its way to your intended destination account within 60 days. Otherwise, you might find yourself in the midst of an expensive mistake.

When the money finally arrives in your new account, make sure to invest it right away according to your asset allocation.

FAQs

What if I already have a 401(k) with my new employer?

This a good thing! You can compare your current employer’s 401(k) with your old one to see which one you like better. You can even combine your old 401(k) with your new one if your new plan accepts account roll-ins.

Where do I send my T. Rowe Price rollover check?

Any check you receive should immediately be forwarded on to the new institution you’ve chosen to accept your rollover contribution. Recall that any amounts not re-deposited to an eligible retirement plan within 60 days may be hit with income tax as well as an early withdrawal penalty.

If you’re sending a check to T. Rowe Price, you can send it along with any forms they require to the following address:

T. Rowe Price Retirement Plan Services, Inc.

P.O. Box 17215, Baltimore, MD 21297-1215

What is the minimum amount to open a T. Rowe Price rollover IRA?

There is no minimum to open a T. Rowe Price rollover IRA. Some T. Rowe Price mutual funds may have asset minimums to start investing, but you can still contribute or roll over money to a T. Rowe Price IRA in any amount

Get Help With Your T. Rowe Price 401(k) Rollover

Rolling over a 401(k) can have many benefits, including expanded investment options, greater control over your finances, and potentially lower fees.

There are many advantages to working with a partner to manage the process — especially if you’re having trepidation around moving money or finding it difficult to make a decision for your rollover. That’s where Capitalize comes in.

We’ve helped thousands of job-changers move their old retirement plans and take control of their finances. If you want to skip the hassle of doing the rollover yourself, click here to have our team of experts manage your rollover from start to finish.

If you have more extensive questions, don’t be afraid to consult a qualified income tax advisor or other credentialed tax professional and ask for help.