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The Secret To Rollovers: Just Do It! By Stephen J. Butler

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In the movie "Casablanca," the goal of a person trapped in that city was to obtain, by any means, a "Letter of Transit" that would allow passage to Lisbon and an escape to the Free World. For those who feel trapped in a former employer's retirement plan, today's Letter of Transit is a document with a distinctly unromantic name: the Direct Rollover IRA Adoption Agreement.

For most people, this unpleasant exercise falls in the nuisance category -- right up there with balancing a checkbook or scheduling a physical. To make matters worse, there's the distinct possibility of making a mistake that could cost money.

In the end, the hardest part of the job is getting started. The chance of doing the wrong thing is statistically less likely than experiencing the cost of leaving the money in an inferior plan at your former employer. When balancing my checkbook, I start by opening the envelope and organizing the checks in numerical order. Sometimes, that's as far as I get, but at least I have started and can continue more readily than I would have with a thick sealed envelope buried in the junk mail. It's like polishing one fender of a car when you don't feel like doing the whole thing. You now have a constant reminder to finish the job.

For an IRA rollover, the analogy is to make that first telephone call and get the applications, or download them from, say, the BUYandHOLD Web site. Remember, these forms need signatures, and originals then need to be mailed in with your check, so you cannot do everything online.

When you receive the application, the temptation is to leave it unopened and avoid doing anything. Don't let that happen! Start filling out the parts that are straightforward and intuitive, such as your name and address.

You will be asked to name a beneficiary, which is important. IRA money to the spouse as a named beneficiary will allow him or her to continue to defer taxes on the increasing values of the plan until they decide to take income from the plan in retirement years. If you make the money payable to your children or to a trust, they will have to pay taxes when you die.

Here's another vital point: you should direct your current 401(k) or retirement plan people to make the check out to your chosen financial institution and add, "as trustee of IRA of …(your name.)" Using BUYandHOLD as an example, a former employee named Sally Smith would direct her 401(k) administrator to make the check payable to "BUYandHOLD as Trustee for IRA of Sally Smith."

When transferring the money, you have a choice. You can have your former employer send it directly to the financial institution, or have them mail it to your home. I think the latter makes better sense. By getting the check at your home, you can personally send the check to the financial institution you have chosen along with the Rollover IRA Adoption Agreement itself. You have the satisfaction of knowing that the check has arrived when or if it appears in your mailbox, and you have the feeling of closure as you send it on to your financial institution.

An added psychological bonus of having the check sent to your home is the experience of actually touching what, for most people, is a check for the largest amount of money they have ever accumulated. Don't worry. You won't succumb to the temptation to cash it, because you can't. It is made out to the new home for your rollover IRA.

This scene reminds me of my father, who reached into the mailbox twenty years ago for his first Social Security check. He pulled it out and yelled, "I'm rich. I'm rich." Any retirement money we have saved, regardless of the amount, is worth celebrating.

You may want to express-deliver the check and application, so you can trace the check if it is lost. If you choose this route, make sure you have the correct address. Many companies have a separate address for non-postal delivered envelopes, such as Fedex and UPS. Call the toll-free 800 number of your financial institution to get clear guidance. Don't worry about the expense of express mail -- the extra day of interest and gains will more than compensate.

Finally, the application will have some lines to fill out for the choice of investments you are specifying. If you have done some research and know what you want, go ahead and fill them out. Otherwise, just select the money market fund for 100% of the deposit and decide later how you want the money distributed. Don't let indecision over investment strategy stand in the way of this transfer. Just do it!

In the end, you will gain a tremendous sense of satisfaction from knowing that your money is safely in the hands of a financial institution and that you have complete control. You can now make investment changes and access your account information on a daily basis. At BUYandHOLD, you can invest in individual stocks that will have enabled you to avoid the stiff fees and expense ratios that you were being charged back at your old employer's plan. in short, you, you have gotten in touch with your inner "take charge" child, and this marks the beginning of a great relationship.

BUYandHOLD does not offer or provide any investment advice or opinion regarding the nature, potential, value, suitability or profitability of any particular security, portfolio of securities, transaction or investment strategy. Any investment decisions you make will be based solely on your evaluation of your financial circumstances, investment objectives, risk tolerance, and liquidity needs. The securities mentioned above are being used for illustrative purposes only and should not be regarded as an offer to sell or as a solicitation of an offer to buy and past performance is no guarantee of future results.