How to Roll Over Your 401k to Schwab
After weighing the pros and cons of rolling over a 401k to an IRA and deciding that a 401k rollover is right for you, the only thing left to do is to execute the rollover. Palisade custodies nearly all of its clients’ funds at Schwab, so your 401k funds will move from your current 401k provider over to Schwab.
Note: While we will refer to 401k in this guide, the steps below apply to other types of employer-sponsored retirement plans, such as 403bs, 457bs, or Thrift Savings Plans (TSPs).
Unfortunately, unlike other types of asset transfers, Palisade is unable to initiate 401k rollovers from the Schwab side. Instead, you will need to contact your 401k custodian and have them initiate the rollover from their side. The steps below walk through this process in detail.
Before initiating the rollover, Palisade will make sure you have rollover IRA at Schwab to receive the funds, and will provide you with its account number. You will need this account number to execute the rollover.
Step 1. Log in to Your 401k Portal and Find the Rollover Option
Log in to the website where you view your 401k balance. Look for a tab or menu item labeled Rollovers, Transactions, or Withdrawals. If you cannot find the rollover option online, you may need to call their customer service number directly.
Note: Don't be alarmed if the button says "Withdrawal." This is the standard term administrators use for moving money out of the plan. Withdrawals only become taxable if you take the cash yourself. For rollovers, the money will be directed to Schwab, not to you.
Step 2: Configure the Rollover
Select your "Distributable Event": The "Distributable Event" or “Qualifying Event” is the official IRS trigger (like leaving a job or reaching age 59½) that permits you to roll over your 401k into an IRA. You must select one of these events to prove you are eligible to move the funds. Choose the option that best matches your status. Options may include:
"Separation from Employment" or "Retirement" (if you have left the job).
"Age 59½ In-Service Distribution" (if you are still working there but are over age 59½).
"In-Service Rollovers (Under Age 59½)" (if your plan allows these types of rollovers, which typically only apply to certain sources of funds such as after-tax contributions or funds rolled into the 401k from a prior employer).
Note: Avoid options such as "Hardship Withdrawal," "Loan," or “Required Minimum Distribution (RMD)" as these distributions are not eligible for tax-free rollovers.
Choose the destination: Select the option indicating you are moving funds to another retirement account. Common labels include:
"Rollover to Financial Institution"
"Direct Rollover to IRA"
"Payment to Third Party"
Note: Avoid options labeled "Cash Out," "Lump Sum to Me," or "Direct Deposit," as these are generally considered taxable distributions. If your 401k provider only offers these types of distributions, see the section below titled “What If the Check Is Made Payable to Me?”
Step 3. Enter the Check Details
While some 401k rollovers might happen electronically, it is still very common for 401k providers to cut and mail a check to Schwab. It’s important that this check is filled out correctly, to ensure the transfer is tax-free.
Payable To: Charles Schwab & Co., Inc. FBO [Your Name]
Note: FBO stands for "For Benefit Of"
Warning: Do NOT make the check payable to yourself, or taxes may be withheld.
Mail Check To: Use the Schwab address below so the check goes directly to your new account:
Charles Schwab & Co., Inc., P.O. Box 2339, Omaha, NE 68103
Memo/Reference: [Your Schwab IRA Account Number]
Make sure to provide your Schwab IRA account number to be included on the check, to avoid potential delays in processing.
Step 4: Wait for the Funds to Arrive
Once you submit the request with the address above, you have completed your part of the process. The funds typically post to your new account within 7-10 business days. We will be notified when the funds arrive and will confirm with you once they do. Once the funds are in your Schwab account, we will begin investing the funds according to your financial plan.
What If the Check Is Mailed to Me?
Sometimes, your 401k provider may refuse to mail the check to a third party for security reasons. If they insist on mailing the check to your home address, do not worry—this is common. Follow these steps immediately upon receiving the check:
Option A: Mobile Deposit (Fastest & Recommended)
Open the Schwab Mobile App and tap Deposit > Checks.
Select your Rollover IRA account.
Endorse the back of the check by signing and writing exactly:
"For Deposit Only to Schwab Account [Your Account Number]"Take photos of the front and back and submit.
Note: You can also send your check to your Palisade advisor who will perform this mobile deposit on your behalf.
Option B: Mail it to Schwab Yourself
If the check amount exceeds the mobile deposit limit (often >$100k-$500k) or if you prefer to mail it:
Endorse the check as described above.
Write your Schwab Account Number clearly on the front of the check (memo line).
Mail via FedEx/UPS (for tracking) to the same address used above.
What if I received two checks? If you had both Pre-tax and After-tax (Roth) money, they must be kept separate. Please let us know if you receive two checks so we can ensure they go into the correct respective IRAs (Traditional vs. Roth).
What If the Check Is Made Payable to Me?
If you receive a check made payable to your name (instead of "Charles Schwab FBO..."), the IRS considers this a taxable withdrawal unless you complete an "Indirect Rollover" within 60 days.
Unlike a direct transfer, you now have possession of the funds, which triggers a strict deadline: the 60-day clock. You have exactly 60 days from the date you receive the funds to deposit them into an IRA. If you miss this window, the IRS treats the entire amount as a taxable cash withdrawal, and you cannot undo it. Additionally, if you are under age 59½, you may face a 10% early withdrawal penalty.
How to Fix This:
If NO taxes were withheld: Simply deposit the full check amount into your Schwab Rollover IRA within 60 days, as detailed above. This typically applies if the balance is under $200 or the funds are from non-taxable sources.
If taxes WERE withheld: To avoid taxes and penalties on the withheld amount, you must deposit the entire original balance of your 401(k) into the Schwab IRA. Since you only received 80% of the cash, you must use your own personal savings to replace the withheld 20%.
Example: You requested a rollover of $10,000, but received a check for $8,000 (20% withheld).
Action: Write a personal check for $2,000 and deposit both checks ($8,000 + $2,000) into the IRA within 60 days.
Result: The full $10,000 is in the IRA. You owe no taxes, and the $2,000 withheld will be refunded to you when you file your next tax return.
