What is a Voya 401(k)?
A Voya 401(k) is a tax-advantaged retirement savings account administered by Voya Financial (NYSE: VOYA). Many different employers across the country utilize Voya’s 401(k) plan services when developing a workplace retirement plan.
More broadly, the company is a financial, retirement, and investment management company based in New York. Initially, the company was a subsidiary of ING, Inc. until its spinoff and subsequent IPO in 2013.
In this context, we will examine Voya as a 401(k) plan administrator.
The core benefits of a Voya 401(k) include:
- Diversified investment choices, including Voya mutual funds
- A wide array of goal-based and target-date mutual funds (ideal for easy selection)
- Tax-deferred 401(k) options compatible with ERISA rules
Options for Your Voya 401(k) When Changing Jobs
If you have a Voya 401(k), you have a variety of options if you decide to change jobs.
If this is you, you can:
- Keep your Voya 401(k) right where it is. Fortunately, this is the “lowest-lift” option, but it does mean you’ll need to be happy with the mutual fund investment options and fee structure that Voya offers.
- Cash it out. Unless you need the money for a dire emergency, it’s not advised to cash out your 401(k) early. You’ll be hit with ordinary income tax no matter when you withdraw the money along with an early withdrawal penalty of 10% (if you’re under age 59.5).
- Roll over your Voya 401(k) to a new employer plan. If you’ve already found a new role and your new employer has a 401(k) retirement plan that allows roll-ins, you can combine your old 401(k) with your new one. This can make sense if you see that the new 401(k) plan is more to your liking than the old one.
- Roll your Voya 401(k) to an IRA. Opening a new IRA account or using an existing IRA account to receive your 401(k) are also options for a direct rollover. With an IRA, you’ll have additional flexibility around investing and more control over fees. Like 401(k)s, IRAs are still subject to Required Minimum Distributions later in life.
- Note: if you have a pre-tax (sometimes called traditional or tax-deferred) 401(k), you will need to open a traditional IRA to roll over your former employer’s plan. If you have an after-tax Roth 401(k), you’ll need to transfer it to a Roth IRA. Mixing this up can cause a tax mess, so be sure to consult with a qualified tax advisor before making any sudden moves.
How to Roll Over Your Voya 401(k)
To roll over your Voya 401(k), you’ll need to follow the steps below.
If this is the first time you’ve rolled over an old retirement plan, fear not — Voya and other similar companies handle these requests on a daily basis, so it’s more than likely that they’ll understand where you’re coming from and be able to help you.
Before you get started, try to gather the following information:
- Account number of your old 401(k) at Voya (check a recent statement if you don’t have it on hand)
- The type of account you have with Voya — specifically, if it’s a Traditional or Roth 401(k)
- Former and current addresses
- Your Social Security number, if Voya is unable to locate your account by other means
Determine the Desired Account
In terms of where to send your old 401(k) account balance, you generally have two options:
- Your new 401(k). If you elect this option, be sure to check with your current employer as to whether they allow roll-ins. In other words, make sure that they’ll accept the rolled-over money when it arrives. Also, give a look to your new company’s 401(k) plan document to determine if you’re satisfied with the investment options and fees.
- A new or existing IRA. An IRA tends to make sense for people who want a wider universe of investment options and for those concerned about 401(k) fees. You’re also able to have a bit more control over the account in general, since you’ll open it up at a provider of your choice. This is a time when it pays to shop around and see which interface you like best — especially if you don’t already have an existing IRA account.
Open The Relevant Accounts
If you’re already working for another employer and have not yet signed up for their 401(k) plan, be sure to do so within a reasonable amount of time. You’ll want to be sure to take advantage of any employer matching as well as any other sort of employer stock compensation. Then, make sure to check that your 401(k) accepts roll-ins.
If you’ve decided to roll over your account to an IRA, take some time to visit a few online brokers to see if you like anyone in particular. Some of the more popular sites include Vanguard, Fidelity, Charles Schwab, Betterment, and Wealthfront.
Once you’ve decided on a plan of action, write down or print out all identifying account information of the account you’ll be rolling money to. This includes the account number, the type of account, and the platform where it’s located.
Begin the Rollover Procedure
Once you’ve done the pre-work, it’s time to initiate your rollover. The first call should be to Voya Financial, who will validate your identity and locate your account.
You’ll want to request a direct rollover of your old 401(k) plan. This means that you won’t actually receive the money in your bank account, but that Voya will send the money via electronic transfer or check to the receiving institution. Once the receiving institution gets the money, they will deposit it into your new account (either the 401(k) or the rollover IRA you chose in an earlier step) on your behalf.
Remember that a direct rollover to either a 401(k) or an IRA — assuming that you roll money between accounts with the same tax treatment — should cost nothing in federal or state income tax. These rollovers, when done properly, are nontaxable (or tax-free) events.
An indirect rollover tends to be a bit more complicated. In this scenario, Voya would cut you a check for the balance of your 401(k), and you’d receive the money directly. Here, however, Voya would be obligated to withhold taxes on any amount paid to you, and you’d then be responsible for depositing the entire original balance, before taxes to your new account within 60 days. If you fail to do this, you could run into major tax headaches — plus penalties.
In any event, once the money arrives to your new account, you’ll be responsible for investing the money according to your broader asset allocation. In other words, you want all of your invested money working together to give you an investment outcome suitable to your risk tolerance. Take this opportunity to create a written plan around your investments, and if need be, seek the help of a qualified financial planner or tax advisor to help.
