Capitalize Review: Easily Roll Over Your 401(k) Into an IRA

When you leave an employer, the stress or excitement might cause you to put your 401(k) account on the back burner. In fact, according to Capitalize, some $1.65 trillion was sitting in forgotten 401(k) accounts as of last year!

Many American workers don’t keep close tabs on their employer-sponsored retirement accounts, and frequent job changes increase the odds of neglecting that 401(k) money.

That's where Capitalize comes in: It can help you find and roll over missing 401(k) balances into IRAs.

. . .

Capitalize Overview

Capitalize is an independent fintech platform that assists people in locating old 401(k)s and 403(b)s and rolling over the funds into an IRA. 

This enables you to consolidate multiple employer-sponsored retirement plans into one and simplify your money management.

You'll retain control of your money no matter where you work, and you'll be able to continue adding to the IRA — unlike with a 401(k), which you can’t contribute to after leaving a job. 

IRAs also offer greater investment flexibility. Some employer-sponsored retirement plans limit the types of investments for employee accounts, so IRAs are a good option if you want more autonomy in selecting investments.

Capitalize is free to use. The company makes money off referrals whenever customers choose one of its partner IRA providers. However, you’re not obligated to pick one of Capitalize’s IRA providers to use the service. 

Types of IRAs You Can Open With Capitalize

Capitalize handles both traditional and Roth IRAs.

With a traditional IRA, taxes are deferred (like they would be with a traditional 401(k)). A rollover into a Roth IRA will be tax-free if you had a Roth 401(k) with your employer, but if you’re rolling over from a traditional 401(k), the conversion to a Roth IRA is taxable.

If you already own an IRA, you can work with Capitalize to roll over another 401(k) into your current IRA. 

Capitalize lists Betterment, SoFi, ETrade, Vanguard, and Robinhood as some of its options for IRA providers, but also says you can choose any IRA provider of your choice. 

How To Open an Account With Capitalize

Getting started with Capitalize is simple. The online application should only take a few minutes. 

1. Locate your 401(k) 

This can mean either telling Capitalize which financial institution manages your old 401(k) or 403(b) or the name of your former employer.

There’s a quick-search database you can use, and if the employer isn’t included, Capitalize will put its experts on finding your 401(k).

2. Choose a rollover IRA account

Capitalize will offer guidance on recommended IRAs for you, comparing details like fees, available investment options, and primary features.

You can use Capitalize even if you’ve already settled on an IRA provider, and they’ll do all the work to open the account for you. 

3. Let Capitalize roll over your 401(k)

The company will contact your old 401(k) provider and the new IRA provider to facilitate the entire rollover. 

What We Like About Capitalize

We like that Capitalize is free to use and you aren’t required to select one of their IRA providers. 

We also like that Capitalize doesn’t limit you to a 1:1 switch. Whether you have one or a dozen 401(k)s to roll over, the platform can help. 

If you've worked at a lot of jobs, searching for several old, abandoned 401(k)s or 403(b)s on your own can feel daunting. Capitalize can eliminate that headache and the sometimes tedious rollover process.

What We Don't Like About Capitalize

Unlike some fintech platforms, Capitalize doesn’t have an app to manage all your financial accounts in one place.

Also, they only conduct rollovers into IRAs and not 401(k)s, so if you’ve already started a new job and have a 401(k) there, you can’t roll over other 401(k)s into the new 401(k).

The company only offers customer support through email — no phone, chat, or in-person support is available. If you’re looking for hand-holding through the process, you won’t find it.

Lastly, while Capitalize has great educational resources about retirement accounts and planning, they can't provide you with any specific tax guidance or financial advice. If you have a unique or complicated situation, you'll need to reach out to a financial advisor or tax professional. 

Who Should Use Capitalize?

Capitalize is ideal for anyone who has 401(k) or 403(b) funds from a former employer and wants to transfer those funds over to an IRA.

If you want someone else to handle the fine print for you, Capitalize is free and simple to use. 

READ MORE: Laid Off? Do These 5 Money Moves First

Who Shouldn’t Use Capitalize?

If you already have an investment advisor or aren’t interested in moving funds to an IRA, then you don’t need Capitalize.

Plus, if you’re sure you don’t have several missing 401(k)s floating around, it might not be as beneficial to you.

Alternatives to Capitalize

Beagle

Beagle is another service that will locate your missing or forgotten 410(k) accounts and take care of the rollover process for you. 

It also says it can facilitate you taking a loan out on your 401(k)s and IRA at 0% net interest.  

DIY rollover

If you don’t mind the legwork and are willing to handle the paperwork, you can roll over an IRA yourself.

Contact your new or current IRA provider for guidance. The retirement account manager at your former employer can likely assist you on their end (though the older the account is, the trickier it may be).

Be sure to consult a tax professional to ensure you’re managing the tax implications properly. 

READ MORE: How To Find Your Old 401(k)

The Bottom Line

If you’re unsure how to access old 401(k) accounts and dread handling the administrative work of rolling them over into an IRA, Capitalize can take care of it for you, eliminating a bit of financial hassle. 

. . .