Vestwell will receive data regarding your employment status from your employer. Typically this information is received on the payroll following the date you leave your company. Your portal will be updated at that time, and you will be given options to either distribute your full account balance or rollover your balance to another retirement account. If we do not receive your termination date from your employer, you will not be given the option to process a distribution or rollover of funds from your account. Depending on your account balance, you may have a time limit on when you need to take action on your account following your termination.
- If the account balance is under $5,000, the balances will be forced out quarterly. This means that your account balance will be taxed as a distribution if you do not roll it over into an existing plan or IRA.
- If the account balance is $5,000 or more, your account cannot be forced out.
- If your balance is low under a certain threshold, the fees to distribute the funds outweigh the account balance; therefore, these accounts are zeroed out.
To read more about Force Out distribution, please see our article: "What Is a Force Out Distribution?"
Once you have decided how you would like to proceed with your account, you can request the transaction directly from your Vestwell portal. If you need assistance, please follow the steps outlined in the below article.
If you have an outstanding loan, you will be required to pay back the loan in full prior to your next tax return filing date. If you fail to do so, the outstanding balance will be treated as a distribution, which means you will likely owe taxes on the amount, plus a 10% penalty if you are age 59 or younger.
When you request a distribution or rollover, your outstanding loan balance will be paid back in full using the existing funds in your account, and you will receive the difference. Alternatively, you can pay back the loan in full using funds from outside your 401k account. Depending on the type of account you have, this can either be done directly through your portal, or you will need to request repayment instructions from our team.
Please download our retirement funds guide for former employees below:
If you need assistance with this, please contact firstname.lastname@example.org.