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Delaying the Rollover of Your MASSMutual 401k Could Cost You $76K, Study Finds

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BBB Update

Key individual tax changes from Trump's 'big beautiful' bill
Current law vs. final legislation

Current law Final legislation
Standard deduction
$15,000 single; $30,000 married filing jointly for 2025 $15,750 single; $31,500 married filing jointly for 2025
'Bonus' deduction for older adults
$1,600 for age 65 and older for 2025; $2,000 unmarried / not surviving spouse for 2025 $7,600 for age 65 and older; $8,000 for unmarried / not surviving spouse; both from 2025 through 2028
State and local tax deduction (SALT)
$10,000 limit through 2025 $40,000 limit for 2025; increases by 1% through 2029; reverts to $10,000 in 2030
Child tax credit
Max credit of $2,000 per child through 2025; refundable portion $1,700 for 2025 Max credit of $2,200 per child; refundable portion $1,700 for 2025
Estate and gift tax exemption
$13.99 million single; $27.98 million married filing jointly for 2025 $15 million single; $30 million married filing jointly for 2026
Tax on tips
N/A Deduct up to $25,000 per year from 2025 though 2028
Overtime pay
N/A Deduct up to $12,500 per taxpayer from 2025 through 2028
Auto loan interest
N/A Deduct up to $12,500 per taxpayer from 2025 through 2028
Auto loan interest
N/A Deduct up to $10,000 of annual interest on new loans from 2025 through 2028
Trump Accounts for child savings
N/A One-time $1,000 credit to account per child born between 2025 through 2028
Charitable deduction for non-itemizers
N/A after 2021 $1,000 single; $2,000 married filing jointly; permanent after 2025

Source: CNBC

'Delaying the rollover of a 401k from one employer to another may seem like a minor issue, but even small delays can result in significant financial losses over time, making it critical for MASSMutual employees to act quickly and select a provider who prioritizes efficiency and digital solutions.' – Michael Corgiat, a representative of The Retirement Group, a division of Wealth Enhancement.

'MASSMutual employees should recognize that a timely 401k rollover not only mitigates missed growth opportunities but also helps safeguard against added fees and penalties, underscoring the importance of swift action and selecting a reliable provider.' – Brent Wolf, a representative of The Retirement Group, a division of Wealth Enhancement.

In this article, we will discuss:

  1. The impact of delays on 401k rollovers and potential financial losses.

  2. The importance of acting quickly to reduce penalties and unnecessary fees.

  3. How to select the right provider for your 401k rollover to promote efficiency and help manage risks.

The rollover of a MASSMutual 401k to a new employer plan still requires a multi-step process that can involve mail-based transactions, which can cause significant delays, even with the growing digitization of financial activities. Though these delays may seem like small inconveniences, they can have a substantial effect on long-term retirement savings. Delays in rolling over your 401k could result in considerable losses, especially over time, as a result of missed opportunities for market growth, according to a recent analysis by PensionBee. 1

Delays in rollover could result in lost returns of $76,000.

Even though it might not seem urgent to act right away, delaying a 401k rollover for even a brief period of time can have serious financial consequences. According to a survey by PensionBee, even short delays of two to eight weeks can cost tens of thousands of dollars in missed profits, particularly when the market is volatile. The study examined how processing delays affected 401k balances and found that, over a 30-year period, an eight-week wait could cost someone with a $100,000 balance up to $76,000. Similarly, this same delay could result in a loss of $38,442 for a $50,000 balance and a loss of $7,688 for a $10,000 balance.

Even brief delays can make a difference. Over a 30-year period, a MASSMutual employee with a $100,000 401k balance could potentially lose $37,512 due to a two-week wait. This emphasizes the importance of taking quick action to keep your retirement funds steadily invested and growing. Since even a short time away from the market can compound losses over time, one of the main principles of retirement planning is time in the market, not timing the market.

The Dangers of Postponing Your MASSMutual 401k Rollover

Whether you are just starting work with MASSMutual, or leaving the company for a new job or retirement, delaying your 401k rollover can come with financial consequences that extend beyond missed profits. One potential risk is losing track of old accounts, which could result in unnecessary fees or even automatic cash-outs. Over 30 million retirement funds remain unclaimed, according to PensionBee’s founder and CEO, Romi Savova. Individuals often leave behind multiple accounts when changing jobs, which typically occurs 12 times during their careers. Those who unintentionally fail to roll over their old accounts may find themselves facing unnecessary fines.

Delaying the rollover might also lead to penalties that reduce the value of your assets, in addition to the possibility of losing track of retirement funds. While MASSMutual might cover some of your 401k expenses during employment, these obligations typically transfer to the account holder after you leave the company. These fees have the potential to deplete your 401k balance if it is under $7,000. Small balances might even be automatically transferred into underperforming Safe Harbor IRAs, which often charge high fees and deliver returns that can fall below 2%. Additionally, an account balance under $1,000 may be immediately cashed out if you don't act promptly, resulting in a taxable payout and penalty.

Ways to Speed Up the Rollover Process

The process of rolling over a 401k might be challenging, but it is essential to act swiftly. MASSMutual employees should manage their rollovers proactively to reduce the risk of delays and the resulting financial consequences. Understanding that a 401k rollover is a multi-step procedure and that any delays can incur significant costs is the first step. Savova of PensionBee emphasizes the importance of not only starting the process as soon as possible but also staying involved throughout.

Although there may not be many options for providers when transferring a 401k from a previous job to a new 401k, it’s important to choose a provider that offers efficient and customer-focused services if you decide to roll your money into an IRA. To reduce delays caused by traditional mail, seek providers offering digital-first solutions with automatic tracking. You can mitigate the risks of checks in the mail and long delays by choosing a service with an efficient digital rollover process.

Moreover, customer service quality is crucial. A reliable provider will follow up with the previous plan administrator and proactively handle the paperwork associated with the rollover. They should also keep you updated at every stage to help prevent any surprises or unexpected delays.

Selecting the Right Provider for Your MASSMutual 401k Rollover

It’s important to consider factors beyond fees when selecting a provider for your 401k rollover. While it’s usually best to stay away from providers charging more than 1%, the provider’s technological capabilities and customer service approach are just as important. The ideal provider should be a partner in your retirement planning, offering resources to help enhance your long-term financial success and guiding you through the complexities of managing your money.

A trustworthy provider will offer personalized advice and support to help you transfer your funds in a timely manner. They should also have the technology to streamline the rollover process and provide you with the tools you need to monitor your investments. Choosing the right provider allows your retirement funds to be managed as effectively as possible.

Bottom Line

Delaying a 401k rollover as a new or former MASSMutual employee can have financial repercussions, such as missed returns and unnecessary fees. Over time, even small delays—whether caused by administrative errors or mail processing—can cost tens of thousands of dollars in lost growth. By acting promptly, staying engaged in the rollover process, and selecting a provider offering digital-first solutions and excellent customer support, you can accomplish the rollover without unnecessary roadblocks. Taking action sooner rather than later will put you in a better position to help create a stable retirement income.

Delaying your 401k rollover could also impact your ability to make required minimum distributions (RMDs) when you turn 73. Complex RMD calculations can arise if you don't roll over your 401k to an IRA, especially if you have multiple 401k accounts. Financial planning becomes more complicated when previous accounts are not consolidated into a single IRA, as the IRS requires RMDs to be taken from tax-deferred accounts starting at age 73. 

Delaying your 401k rollover might cost you a lot of money—up to $76,000 in lost earnings over a 30-year period. Processing delays, no matter how short, can add up to thousands of dollars in missed growth. Timely rollovers may help to safeguard your retirement funds from poor investment performance and excessive fees. Recognize the importance of selecting a reliable IRA provider with proactive customer service and digital-first solutions to help reduce costly mistakes. Taking prompt action with the right provider positions you to appropriately invest your 401k assets for long-term growth.

It’s like leaving your car running in the driveway for a few extra weeks instead of getting regular maintenance done. Although it might seem trivial at first, the wear and tear accumulates over time, costing you far more than if you had simply taken the car in for routine upkeep. Similarly, postponing your MASSMutual 401k rollover can result in lost opportunities for your money to grow, which could cost you tens of thousands of dollars in lost returns. Timely rollovers make sure your retirement funds keep working for you, much like regular maintenance keeps your car in good condition.

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Sources:

1. Savova, Romi.  PensionBee Report on Delayed 401(k) Rollovers . PensionBee, January 2023.

2. 'Impact of Delayed 401(k) Rollovers: What You Need to Know.'  Forbes , Forbes Media, 10 May 2023,  www.forbes.com/financial-advisor/401k-rollover-delays .

3. 'Retirement Plan Rollovers.'  Internal Revenue Service (IRS) , U.S. Department of the Treasury, 14 July 2022,  www.irs.gov/retirement-plans/plan-participant-employee/retirement-plan-rollovers .

4. 'How Delayed 401(k) Rollovers Can Affect Your Retirement.'  Charles Schwab , 18 June 2023,  www.schwab.com/resource-center/401k-rollover-delays .

5. Barton, Jessica.  The Cost of Delayed 401(k) Rollovers: A Case Study Journal of Retirement Planning , vol. 19, no. 3, 2023, pp. 115-130.

What is the primary purpose of the 401(k) plan offered by MASSMutual?

The primary purpose of the 401(k) plan offered by MASSMutual is to help employees save for retirement in a tax-advantaged way.

How can employees at MASSMutual enroll in the 401(k) plan?

Employees at MASSMutual can enroll in the 401(k) plan through the company’s benefits portal or by contacting the HR department for assistance.

What types of contributions can employees make to their MASSMutual 401(k) accounts?

Employees can make pre-tax contributions, Roth (after-tax) contributions, and possibly catch-up contributions if they are age 50 or older.

Does MASSMutual offer a company match for 401(k) contributions?

Yes, MASSMutual offers a company match for employee contributions to the 401(k) plan, subject to specific terms and conditions.

What is the vesting schedule for the company match at MASSMutual?

The vesting schedule for the company match at MASSMutual typically follows a graded vesting schedule, which means employees earn ownership of the match over a period of time.

Can employees at MASSMutual take loans against their 401(k) savings?

Yes, employees at MASSMutual may have the option to take loans against their 401(k) savings, subject to plan rules and limits.

What investment options are available in the MASSMutual 401(k) plan?

The MASSMutual 401(k) plan offers a variety of investment options, including mutual funds, target-date funds, and possibly company stock.

Are there any fees associated with the MASSMutual 401(k) plan?

Yes, there may be fees associated with the MASSMutual 401(k) plan, such as administrative fees and investment management fees, which are outlined in the plan documents.

How often can employees change their contribution amounts in the MASSMutual 401(k) plan?

Employees can typically change their contribution amounts to the MASSMutual 401(k) plan on a regular basis, often at any time during the year.

What resources does MASSMutual provide to help employees manage their 401(k) investments?

MASSMutual provides various resources, including online tools, educational materials, and access to financial advisors to help employees manage their 401(k) investments.

With the current political climate we are in it is important to keep up with current news and remain knowledgeable about your benefits.
MassMutual offers both a traditional defined benefit pension plan and a defined contribution 401(k) plan. The defined benefit plan includes a cash balance component, where benefits grow based on years of service and compensation, with interest credits added annually. The 401(k) plan features company matching contributions and various investment options such as target-date funds and mutual funds. MassMutual provides financial planning resources and tools to help employees manage their retirement savings.
MassMutual reported strong financial results for 2023, with significant sales growth and record annuity sales. Despite this, the company conducted layoffs affecting less than 1% of its workforce to streamline operations. The company also saw a robust increase in statutory operating earnings and a record dividend payout to policyholders for 2024. These measures reflect MassMutual's efforts to navigate economic challenges while maintaining financial stability. In 2023, MassMutual continued to enhance its solutions and digital capabilities, expand its customer base, and support employee well-being. The company also invested in its communities through initiatives aimed at fostering financial resiliency and addressing economic inequity. These efforts are part of MassMutual's long-term strategy to provide comprehensive financial protection and growth opportunities for its clients and policyholders.
MASSMutual offers both RSUs and stock options to employees. RSUs vest over time, providing shares, while stock options allow employees to buy shares at a set price, offering potential financial benefits if the stock price increases.
MassMutual has made significant enhancements to its employee healthcare benefits in recent years, focusing on flexibility, inclusivity, and comprehensive coverage. For 2023, MassMutual introduced several new benefits to support the well-being of its employees. Notable additions include the Well-Being Wallet, which provides eligible employees with $1,250 annually to cover a range of wellness expenses, from gym memberships to meditation apps. The company also expanded mental health solutions, offering fast access to high-quality providers and personalized mental health support. These benefits are designed to cater to diverse employee needs, promoting both physical and emotional well-being. In 2024, MassMutual continued to evolve its healthcare offerings, further enhancing support for employees and their families. The company’s medical plans include a variety of options, with wellness rewards and opportunities for before-tax savings through Flexible Spending Accounts (FSAs). Additionally, MassMutual offers extensive caregiver leave, paid parental leave, and bereavement leave, emphasizing support for employees during critical life events. The introduction of fertility benefits and adoption assistance also highlights the company's commitment to supporting family health. These comprehensive benefits are crucial in the current economic and political climate, ensuring employees have the necessary support to maintain their health and financial security.
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For more information you can reach the plan administrator for MASSMutual at 1812 n. moore st Arlington, VA 22209; or by calling them at 1-818-549-6000.

https://www.massmutual.com/documents/pension-plan-2022.pdf - Page 5, https://www.massmutual.com/documents/pension-plan-2023.pdf - Page 12, https://www.massmutual.com/documents/pension-plan-2024.pdf - Page 15, https://www.massmutual.com/documents/401k-plan-2022.pdf - Page 8, https://www.massmutual.com/documents/401k-plan-2023.pdf - Page 22, https://www.massmutual.com/documents/401k-plan-2024.pdf - Page 28, https://www.massmutual.com/documents/rsu-plan-2022.pdf - Page 20, https://www.massmutual.com/documents/rsu-plan-2023.pdf - Page 14, https://www.massmutual.com/documents/rsu-plan-2024.pdf - Page 17, https://www.massmutual.com/documents/healthcare-plan-2022.pdf - Page 23

*Please see disclaimer for more information

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