Liz Weston: Bad advice from the 401(k) administrator can cost you money

Dear Liz: I recently switched jobs and realized that over the years I have several 401(k) accounts from previous employers that need to be consolidated.

When I contacted my current employer’s 401(k) administrator to understand the rollover process, they told me to get a paper check in the mail for each previous employer and then mail the checks to them. Liz, we’re talking about four checks totaling a very substantial sum! They said there is “no other way” to handle the rollovers. I cannot understand why we are still dealing with such an archaic process in this day and age.

Should I be concerned or should I just go ahead and settle this now since I don’t have much say in the process?

Answer: You should certainly be concerned, and you shouldn’t assume that your employer’s 401(k) administrator understands the opportunities at other companies. Receiving a check in the mail from an old subscription is not only unsafe, but also results in a 20% withholding requirement.

If you want to avoid taxes and penalties on the missing 20%, you’ll have to take that money out of your own pocket. (If you didn’t deposit the check with the new plan or in an IRA, you’ll owe taxes and possibly penalties on all the money.)

When you contact the administrators of the old plan, ask if they can do a “direct rollover” to your new 401(k) account. Often the transfer can be done electronically.

Even if the old plan uses a paper check and the U.S. Mail to deliver the money, you can avoid the 20% withholding requirement if the check is issued to your new account instead of you.

Dear Liz: Can I buy US Treasury bills myself or do I have to go through a bank or financial advisor?

Answer: You can purchase government-issued securities, including Treasury bills, bonds, and bills, from TreasuryDirect, which is administered by the US Treasury Department. Setting up an account usually only takes a few minutes, but you’ll need a valid social security number, a US address, and a checking or savings account to complete the process.

You can also buy Treasuries in a brokerage account. You can buy a Treasury bill on what is known as the secondary market, where securities are bought and sold, or you can invest in a Treasury money market mutual fund or a Treasury exchange-traded fund.

Liz Weston, Certified Financial Planner, is a personal finance columnist NerdWallet. Questions can be sent to her at 3940 Laurel Canyon, No. 238, Studio City, CA 91604, or by using the “Contact Us” form at