401(k) participants can use this article to claim a force-out IRA and decide what to do with funds automatically rolled over from a previous employer's plan.
What is a force-out IRA?
A force-out IRA is an individual retirement account (IRA) opened on your behalf if you leave an employer and don't choose what to do with your 401(k) funds by a specified deadline.
If your former employer's plan has a force-out provision, your money can automatically be rolled into this new IRA if your balance is below a certain threshold—typically between $1,000 and $7,000. This happens only if you do not provide us with instructions on where to move your funds before the deadline.
Note: The threshold does not include money rolled into your account from another plan or IRA.
Why claim your account
Because you did not open this account yourself, it has limited features until you complete the claim process. This means that until you claim your account, you can’t make new contributions, change your investments, or start a rollover.
Claiming your account gives you full access to your funds and IRA features.
How to claim your force-out IRA
Sign in to Gusto Retirement.
Go to the banner at the top of your dashboard and select Claim my IRA.
Follow the prompts to claim your account.
What you can do after you claim your account
After you claim your account, you can choose one of these options:
Keep your funds with Gusto Retirement
If you keep your funds with Gusto Retirement, you can continue using the account as an IRA with full access to features, like contributions, investment changes, and inbound rollovers.
Move your balance to another IRA or eligible retirement account
You can transfer or roll over your funds to another IRA or eligible retirement plan.
If completed as a trustee-to-trustee transfer or direct rollover, this is not a taxable event.
Take a cash distribution
You can also withdraw your funds in cash.
Important: A cash distribution may be taxable, federal and state withholding may apply (typically at your direction), and if you’re under age 59½, you may owe an additional 10% early withdrawal tax unless an exception applies.
Understand fees and what happens if you don’t take action
Heads up: Your account is subject to a monthly account fee, whether or not you take action.
If you do not claim your assets, your state’s unclaimed property laws may eventually require Gusto Retirement to turn your funds over to the state. This timing varies by state, but if that happens, you can recover your funds by contacting your state’s unclaimed property program.