Capitalize Review: The 401(k) Rollover Service
Although I consider myself a personal finance nerd, rolling over my 401(k) from my former employer seemed liked a tedious task. After looking at the many forms from both my new and my old and employer that I had to fill out to do the rollover, I easily put this task at the bottom of my to-do list. So when I heard of Capitalize, a free rollover service, I knew that this was a sign for me to finally rollover my 401(k).
What is Capitalize?
Capitalize is a New York start-up that specializes in making the 401(k) rollover process easy for anyone that has yet to rollover their 401(k) into an IRA. Their services are completely free and they get paid by referrals if you decide to open up an IRA with one of their providers on their platform. They are not financial advisors or tax advisors. They specifically specialize in IRA rollovers and not 401(k) employer rollovers, but they helped me with my 401(k) rollover into my current employer’s 401(k) plan. If you have no idea what brokerage account your old 401(k) is located, they are happy to help you find it.
You start by creating an account with Capitalize and filling out their questionnaire. The first question they ask is if you already know what brokerage account your old 401(k) is located in. You can search for it and select the brokerage account if you already know which one it is or you can go with the option that allows you to search for your old employer’s 401(k) provider by typing in the name of your employer. Their system is not perfect, so they said they need to double check to make sure. In my case I already knew where my old 401(k) provider was, so I had no trouble locating it.
Once the old 401(k) provider is located, there is still a bit more information that needs to be filled out. You must let them know what the name of your old employer is, the date you left the old employer, and type of 401(k) (Roth, traditional, or mixed). You also have the option of uploading an old 401(k) statement and/or your old 401(k) plan number to make the process even easier for them to locate your 401(k). You can also leave specific set of instructions for your rollover and a customer service representative will contact you if they have any further questions.
The final process of setting up your account is to choose whether you will be rolling over your IRA to an existing IRA or creating a new one with one of their partners. Capitalize has a good list of partners such as Fidelity, Vanguard, Charles Schwab and so many others. If you would like to support them, I highly recommend you choosing one of these providers.
Once you submit your rollover information, Capitalize will let you know where in the process they are with the rollover. The steps are Rollover Initiated to Rollover Processing to Rollover Complete. I personally had to make changes to mine from when I first submitted the rollover and a customer service representative made the manual changes for me, so feel free to reach out to them if you need to make some changes.
I had around $500 in my old 401(k) account. In the beginning I wanted to rollover the Roth portion of my 401(k) to my Roth IRA and the traditional portion to my current employer’s 401(k) provider, but this was not possible because my old 401(k) provider (John Hancock) did not allow transfers to occur from two different providers. A Capitalize service representative notified me that this was not possible so I opted to get both my Roth and traditional 401(k) to be rolled over into my current employer’s 401(k) provider. I decided to rollover my 401(k) into my current 401(k) provider because recently my employer eliminated the previous administrative fees they had and they now offered more investing options that had low expense ratios like index funds, such as Vanguard’s S&P 500 mutual fund.
My rollover experience was frustrating to say the least and it had nothing to do with Capitalize. Although Capitalize does not specialize in 401(k) rollovers into other 401(k) plans, they did help me with mine and hand held me through the process and many times took over. Capitalize contacted me on the phone and we generated a plan for my 401(k) rollover service. The frustrating process through it all was my former employer’s HR and their lack of follow-up and communication. Capitalize contacted my former employer and my former employer sent the forms that I had to fill out in order to initiate the rollover. Since Capitalize had my information, Capitalize filled out my forms. I also had to contact my current employer and I had Capitalize fill out the forms. Once the forms were submitted, the HR at my former employer notified me that it would take 3 weeks for the process to complete and then they will request my signature. The process took well over three weeks and Capitalize and I did not many follow-ups during that time. Capitalize was on top of their customer service game by contacting me every week and asking me if there are any follow ups via their customer service chat or by phone. When John Hancock finally released the funds, it was the end of me dealing with my former HR.
But, I ran into a problem during my rollover. My current 401(k) provider was being acquired by a different company and there would be a blackout period, meaning no transactions on my 401(k) would be allowed until the acquisition was complete. I knew this would be happening, but I didn’t think the rollover process would take over one month to complete. I panicked and I called Capitalize to help me get to the bottom of this. Capitalize called John Hancock, while I was on the line, to confirm if the rollover process went through and they didn’t send a check to a provider that was no longer there. John Hancock confirmed that they actually did not send a check, it was a wire transfer to my current 401(k) provider. This made me feel better because Capitalize explained to me that wire transfers are instant versus sending a live check which can take days. But the problem was that we still had no idea if the money was deposited into my new 401(k) account. Luckily, I received an email from the new 401(k) provider asking me to confirm the two transactions that John Hancock submitted. This meant that the wire transfer from John Hancock happened the day before the blackout period, which was a lucky break for me because then Capitalize would have had to contact John Hancock to reissue another transfer.
I had to call the new provider and go on the John Hancock portal and find out the exact amount that was transferred from the Roth and Traditional portion of the transaction for them to approve the deposit. That was it. That was the final step. I let Capitalize know that the rollover was finally complete and thanked them for all of their help.
I have to admit that I did not expect the process to be so lengthy and filled with so many twists and turns. But my experience will be different than yours because your HR contact and 401(k) provider all handle rollovers differently. Capitalize explained this to me and they have dealt with it all.
Do not forget about your old 401(k) even if you have a little bit of money in it. I want to emphasize that just because my journey took a lot longer than I expected and seemed tedious that it is important to not just leave your 401(k) funds in your old employer. You have to do your research. What kind of investing options and administrative fees does your old 401(k) have? Your old employer also might not communicate with you any of the 401(k) changes to their plan. I had to send those communications to my former co-workers because they never received them. Remember that wherever your money is, your 401(k) provider has the fiduciary duty to release your funds and it should always be an urgent matter to them.
I am so thankful that Capitalize helped me through the process. They did the work I dreaded the most which was contacting my former HR contact and calling the 401(k) providers. Even though I only had around $500 in my old 401(k), they treated my case with care and they followed-up. They explained the whole process to me and were so attentive with my case. The customer service chats were great and the customer service representatives were always so sweet on the phone. They answered all of my concerns and were determined to help me get my money no matter what.
Capitalize’s customer service is top notch. I would use their services again to rollover my old 401(k), but I would not do the rollover to another 401(k). The process would have been a lot easier if I did a direct IRA rollover for the both of us. Dealing with two HR departments is a bit too much for me. I truly hope that Capitalize can continue providing these services for free and the services continue to be top notch. I hope this is a sign for you to rollover your old 401(k) and consolidate your investments.
Here is my referral link if you are interested in using Capitalize’s rollover services: https://hicapitalize.com/?r=LCrVRVjB