This is a question we at iTrust get asked often. Most people are not aware of how bad the process is for rolling over retirement plans like 401ks, 403b, IRAs, and many others.
To think in times when we can communicate with anyone in the world within seconds, you wouldn't think it takes weeks to simply transfer funds from one financial institution to another.
But it does, and it's getting worse.
To establish an iTrustCapital IRA account, it takes approximately 1-2 business days. This is assuming all the information submitted online is in good order and the account type and funding method are eligible.
Once a new IRA is established, the slow and often painful process of moving retirement funds begins.
To rollover an employer plan (401k, 403b, TSP, 457, etc.), a client will contact the plan administrator to initiate the rollover with the instructions we provide. We provide both bank wire instructions and check mailing instructions. Unfortunately, 99% of all plan administrators only mail physical checks. And to make it worse, they only send it through the old-fashioned regular mail.
Combine a long processing period with snail mail, and a rollover can take up to a month to fund.
Clients often contact us to get an update of where their check is. Unfortunately, we have no way to assist. We, like our clients, are at the mercy of the plan administrator and USPS.
When contacting the plan administrator, get specifics.
What day is the check going to be sent? Or was sent?
What method was the check sent?
If it has not been mailed yet, can I pay to have it expedited?
If so, what is the tracking number?
If mailed regular mail, the average time for delivery is 7-10 business days. (If it doesn't get lost)
To transfer an existing IRA, a client will need to print, sign, scan a physical transfer form that we provide. iTrust will then add the necessary information and forward it to the transferring custodian.
We encourage clients to contact their transferring custodian a few business days after they return their transfer form to our processing team.
Transfer form claimed to not be received by transferring custodian.
We are hearing this more and more these days. Of course, in almost all instances, we have a fax transmittal receipt to prove they received the transfer form.
Why would they say they don't have it when they do? A couple of answers to that question.
They are experiencing an extreme increase in clients moving funds out of traditional financial institutions—couple this with Covid and remote working, and it is the perfect recipe for disorganization and delays.
They are not incentivized in any way to help clients move money out and simply drag their feet to process transfers.
Transfer forms rejected by transferring custodian.
Remember, the transferring custodian likely has no incentive to help move funds out efficiently. If there is any reason to reject the transfer form, it usually will be.
The signature does not match what is on file.
The account number or type of account does not match what is on file.
Unclear copy of the form.
Take your time when filling out the transfer form. Go over it a couple of times to make sure it is filled out correctly.
The clearer the information and the higher the quality of the scanned form the better.
Be sure to fill out the checklist thoroughly. Mainly noting the best method of submitting the transfer form to the transferring custodian. (fax number, email address, or overnight address). Contact your custodian for this information.
Our goal at iTrustCapital is to fund our client's accounts as efficiently and quickly as possible. We are aligned with our clients on this goal. iTrust receives no benefits by delaying the funding of accounts. However, that cannot be said about the transferring custodian.
For example, why do most employer plans only mail checks through the regular mail when they can easily do a bank wire? I'm sure you can come up with the answer to that question.
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