Capitalize Review: How to find forgotten 401(k) accounts and roll them into an IRA

A 401(k) account is one of the most powerful tools you have for saving for retirement — so it's important to keep track of yours even when you switch jobs. The average American changes jobs approximately every four years over the course of their career. And, unfortunately, many individuals forget about their 401(k) account from their old employer in the process.

Capitalize, a fintech company and the focus of this review, ran a 2021 study that found that there are an estimated 24.3 million forgotten 401(k)s. This could mean that an individual is potentially forgoing almost $700,000 in retirement savings over their lifetime, the study explains.

To combat the issue of employees forgetting their old 401(k) accounts, Capitalize finds your old account(s) and coordinates the IRA rollover for you. Below, we review the Capitalize platform to help you learn more about its features, pricing and process so you can decide if it's the right way to go about managing any 401(k) accounts you may have potentially forgotten.

• How it works
• Features
• Pricing/fees
• Reviews
• Bottom line

After you go to Capitalize's website and click "get started," the platform asks you whether or not you know where your old 401(k) account is. If you answer yes, it'll take you to a page where you'll select the financial institution that manages the 401(k). If you answer no, you'll then be asked to enter the name of the employer that sponsored your old 401(k).Capitalize should then identify which financial institution holds your old 401(k).

Once that's settled, the platform asks whether or not you already have an IRA. Many people typically roll their 401(k) into an IRA once they no longer work at a company. This allows them to avoid paying any maintenance fees (or higher maintenance fees) that were otherwise waived when they were still employed by the company. Another benefit to rolling your 401(k) into an IRA means you can decide what you'd like to invest in instead of being limited by the options your old employer offered at the time.

If you indicate that you don't already have an IRA, Capitalize will walk you through opening one. The platform will recommend a few popular institutions that have partnered with Capitalize, and even points out some useful features to help make the decision easier such as any associated fees, the types of assets you can invest in, ratings for ease of use and account minimums.

Select ranked Charles Schwab and Vanguard as some of the best IRAs based on a number of factors, including low fees, and $0 minimum deposit requirements. It may be worth opening up an account with one of these institutions and then use Capitalize to facilitate the transfer process to your new account.

Once you choose where you'd like to open your IRA, you'll use your email and come up with a password to create an account on the platform. From there, Capitalize communicates with your 401(k) provider to ensure that everything is transferred, according to the website. You just need to sign paperwork where appropriate.

In addition to finding your old 401(k) account and creating an IRA on the spot, Capitalize also offers access to experts — called "rollover concierges" — who can help answer any questions you have about the rollover process. One thing to remember is that these concierges aren't financial planners and don't have a fiduciary duty toward you. Think of them more as helpful customer service representatives whose expertise is limited to Capitalize.

While Capitalize can help you roll your old 401(k)s into a new IRA or an existing IRA, the platform can't help you roll your old account into your current employer's 401(k) account.

Another thing to note is that while Capitalize can help you with rollovers into both traditional and Roth IRAs, the process for the latter is a bit more complicated. Capitalize will first need to rollover your 401(k) into a traditional IRA and then convert that traditional account into a Roth IRA. Roth conversions are taxable, and Capitalize's website recommends speaking to a tax professional before moving forward with this type of rollover.

Capitalize doesn't charge users for its service. The way the company makes money is by receiving a referral fee from its partner financial institutions if you open up a new IRA through the platform.

Reviews on Capitalize's website praise the platform for how it handles the rollovers, with many citing that the process was easier than they expected. One user said that a representative from Capitalize was even able to help them move an old 403(b), which is a common retirement plan for public school employees, nurses and employees at nonprofits and government agencies, into an IRA.

In terms of the timeline for the process, one reviewer mentioned that the rollover process was complete and they had the funds in their IRA within 7–10 days.

Overall, Capitalize provides an accessible way for finding old 401(k) accounts and rolling them into an IRA. The platform's features account for some common hang-ups when it comes to 401(k) management, such as not knowing who holds their old 401(k) account or not having an IRA account to serve as a destination for the old 401(k) account's funds.

Capitalize also takes some hassle out of selecting a new IRA by discussing the features of some popular accounts all during the process so users don't feel too overwhelmed with doing that research on their own. Plus, the fact that the platform offers human assistance and is free to use makes it seem like a low-risk way to finally get ahead of your retirement account management.

Just keep in mind that this platform can't help you roll old 401(k)'s into your current 401(k) account. If you require a platform for other investing needs, such as a taxable brokerage account, consider robo-advisors like Betterment or Wealthfront.

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