A 401k Plan Checklist When You Change Jobs

So you've made the move and upgraded to a new job, and likely more responsibility and a bigger paycheck. Congratulations -- just don't forget about your 401(k) plan. You'll need to make a few retirement savings-boosting moves to ensure your 401(k) still operates in top gear after you've moved to a new employer.

Make no mistake, plenty of Americans will switch jobs this year, a scenario that's trending upward.

According to the payroll processor ADP, approximately 27 percent of employees transitioned into new jobs from the first quarter of 2016 to the first quarter of 2017. That's the highest figure since 2014, ADP reports.

Each one of those employees hopefully took steps to secure their 401(k) plan when they did land at a new job. If not, they're leaving the door open for an underperforming 401(k) down the road.

[Read: How to Create a Retirement Investing Strategy.]

"When you switch jobs, make sure to roll that 401(k) over into your new plan," says Ryan Kwiatkowski, marketing director at Retirement Solutions, in Naperville, Illinois. "Talk with human resources your first day on the job, or after you've accepted that new role, and collect any information needed to ensure that it happens."

Kwiatkowski says that's especially important with millennials today who tend to "not be as loyal" to employers as our baby boomer parents were, so they really need to make sure to consolidate those 401(k)s along the way. "The last thing you want to have is your retirement spread across multiple employers; you want to have a single view into what your portfolio looks like today and for tomorrow," he says.

When you do have that conversation with your employer, what ground should you cover? Here are a few tips:

Consolidate into an IRA. Consider rolling your account to an IRA to make your life easier during a job transition, says Gretchen Caldwell, president of Pure Planning in Danville, California. "This might not be necessary if you plan on going back and check on your 401(k) account regularly," she says. "If you are and you like your investment choices then leave it there. If not, then consider an IRA so you don't forget your old 401(k) as you get to work in your new job."

Address any loan issues. If you have an outstanding plan loan, confirm your current balance and how long you have to pay it off, before the amount is automatically defaulted and therefore taxable to you. "Terminated employees often forget that any unpaid loan balance is deemed a taxable distribution," says Stacey Tucker, a retirement specialist at CecilCo 401(k) Managed Solutions in Texas. " If the unpaid loan balance is large, it can create a tax issue."

[See: 11 Ways President Trump's Tax Plan Could Affect Americans.]

Check on potential "close-out" fees. Inquire with your plan vendor or human resources representative if any special fees are applied to accounts of terminated employees. "Legally plans may assess some administrative fees to accounts maintained for terminated employees," Tucker says.

Look at the fees you are paying for each of your investments. "If they're above 1 percent and you have no less expensive options, consider moving your investments to an IRA where you can pick your own low-cost investments," Caldwell says.

Ask about the match. If your new employer offers a 401(k) company match, meaning they'll match your contribution up to a certain amount, take full advantage. "If you contribute 3 percent and your employer matches 3 percent, you are doubling your investment from the start," says Kevin Driscoll, vice president of advisory services for Navy Federal Financial Group.

Rollover into the new plan. If you are allowed, transfer your old 401(k) to your new company's retirement plan. This way, your investments will all be in one account and easy to monitor, Driscoll says. There is, however, a caveat. If your new company's 401(k) plan has higher fees you can leave your retirement fund with your old employer, but understand that you'll no longer be contributing to that fund.

Request rollover documents from the current plan provider. "These forms allow you to list the information of the receiving account and you can typically ask the receiving plan provider on guidance on how to fill out the form (account numbers, addresses, etc.)," says Anthony G. Lanza, vice president at Spectra Investment Management in Stuart, Florida.

Note your companies vesting schedule. If you are 100 percent vested in your current plan, then 100 percent of the plan's value is eligible to be transferred to your new plan (or IRA.) If you're not vested, then only a portion of your old employer's contributions will be eligible for transfer, although 100 percent of your contributions will always be eligible.

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Also, know the burden for executing a transition is on the 401(k) plan participant.

"You'll need to stay on top of things to make sure that all of their monies are accounted for and transferred," Lanza says. "You'll also need to ensure the rollover gets registered correctly so that there are no erroneous tax consequences, and that it gets executed in a timely manner."

Brian O'Connell is a contributing financial writer for U.S. News & World Report. A former Wall Street bond trader and the author of two best-selling books; "The 401k Millionaire" and "CNBC's Creating Wealth", he has 20 years experience covering business news and trends, particularly in the financial, technology, political and career management sectors. His byline has appeared in dozens of top-tier national business publications, including CBS News, Bloomberg, Time, MSN Money, The Wall Street Journal, CNBC, TheStreet.com, Yahoo Finance, CBS Marketwatch, and many more. Visit his web site at: https://brianoco.contently.com/. Or, visit this Amazon.com link for a list/review of some of his book titles. Reach out to him on LinkedIn.