Did you get a letter about your 401k retirement account?

Here’s what it means and what to do now.

If you are a participant in the 401k plan of your former employer and have an account balance less than $5,000, you may receive letter giving you the choice of rolling over your account balance to an individual retirement account (IRA) or closing the account and taking a distribution

You do not need to do anything at this time. We will take care of setting up a new individual retirement account (IRA) for you and help you complete a timely rollover.

Why is this happening?

Your account balance is less than $5,000. Your option is to move it to an IRA or request a distribution.

If your account balance is more than $5,000 by the distribution date (30 days from the date of your letter), your account will remain in the plan. You may verify your account balance at any time by logging in.

What happens next?

No earlier than 30 days from your letter date July Business Services (JULY) will provide information to the IRA administrator to set up your new account. Your balance will be automatically rolled over and invested in the Lincoln Stable Value Fund, which is designed to preserve principal and provide a reasonable rate of return.

Once your account is established, you will receive a welcome letter with instructions on how to access your new IRA.

Will I owe taxes on the rollover?

No. A rollover allows you to postpone paying taxes until you withdraw your money from the IRA. If you have more questions about taxes, please consult your tax or financial advisor.

Are there fees?

If applicable, processing fees of up to $120 will be paid from your retirement account. If your account balance is less than the processing fees, your account will be closed, and no funds will be distributed.

Once your new IRA is set up, you are responsible for paying IRA fees from your account balance. Fees for the new provider include:

  • Annual IRA fee: $55 (charged to your account upon startup and then annually on each anniversary of your account opening date)
  • Monthly maintenance fee: 0.07083%. If your account balance is less than the IRA fees, your account will be closed.
  • Distribution fees: $25 per lump sum distribution and $8 per periodic payment

There are no trading fees.

Do I have other options?

If you prefer to roll over your account to another institution or take a cash distribution:

  • Please log into your account
  • Select from the menu Loans & Withdrawals
  • Then Request Distribution and follow the instructions

You must complete your online request within 30 days of your letter date. Please allow up to 15 business days for processing.

A processing fee of up to $120 will be paid from your account. If your account balance is less than the processing fees, your account will be closed and no funds will be distributed.

Have questions about taxes on IRA distributions? See “You Might Ask…

We’re happy to help. Call us.

If you need help or have questions, please call Participant Services at 888.333.6315. Reach us Monday through Friday from 7:00 AM to 6:30 PM CST.