Moving your money
Before you even start packing the china, think about
moving a more valuable resource: your money.
Moving money isn't difficult, but it does take some
planning. And unless you're careful, there could be times when you
can't access your own funds.
The first step is to get organized. Make a list of
every financial account you have, from your daily checking account
to that IRA you opened when you got your first job. And don't forget
to include joint accounts with family members.
Now that you have a financial inventory, you can get
to work. Do some shopping to learn which banks or credit unions
are available in your new community. See which ones best suit your
needs. Decide which current accounts, if any, you want to keep.
Be warned: Many banks now run a credit check
as part of the application process. A flurry of credit checks can
lower your credit score, making it more difficult and expensive
to get that new home loan. If you've done your homework before you
apply, you can keep the inquiries to a minimum.
Making the move
For most of the accounts you're moving, there's a three-step process:
Open the new account, move the money, close the old account.
Opening accounts is easier than ever, and many banks
will let you start the process by phone or online. Since you also
have to send papers back and forth, allow for mailing time when
you figure how long it should take to open a new account.
Try to start the process at least a month ahead
of time, especially if you intend to use direct deposit. Some employers
need a month before they can initiate a direct deposit. Others can
do it in a week. Talk to your accounting or human resources department
and that will give you an idea of your time frame. The goal: to
have your account set up enough in advance that you can move from
one account to another without having to deposit a paycheck manually.
Often, banking experts recommend opening your accounts
as soon as you know your new address. But in many cases, you don't
have to wait that long. Some institutions will open your account
using your current address. When you move, you simply notify them
of your address change.
With a checking account, moving is especially
problematic. It usually takes about two weeks to order checks with
the new address. In the meantime, no merchant wants those nearly
worthless fill-in-the-blank counter checks. So open the account
as early as you can, and order your checks as soon as you know your
new address. If there is a gap, you can use a check card to cover
any purchases you need.
When you don't want to move
If you've developed a relationship with a bank
or credit union, you may not want to move that account, especially
if you are shopping for a new home loan or think you may want to
use those services in the future. With credit unions, as long as
you maintain your account you keep your options open even after
you no longer meet the criteria for membership. If that's the case,
ask about the procedures -- and costs -- of keeping your accounts
"Today, your money can be in a lot of different
places," says Ed Slott, CPA and author of the monthly newsletter
Ed Slott's IRA Advisor.
If you use a large national bank, it's also possible
that you'll want to switch branches rather than banks. Or consider
opening an account with an institution that offers service in your
current and future locations.
Sometimes you may not intend to close an account but
discover, post-move, that it's just easier. Leslie Levine, author
of "Will This Place Ever Feel Like Home?," remembers a
financial adviser that she wanted to retain after relocating. But
"when we moved, we might as well have disappeared from the
face of the earth," she recalls.
"I started to resent deposits I was making
to that account because she would get a portion," Levine says.
Her solution: Use the wealth management services offered
at the new bank. "Let the bank pitch you on their investment
[services]," she says.
Even if you don't intend to use all the options offered
at your new bank or credit union, some of them could be the answers
to moving-related problems that will pop up later.
When it comes to closing out accounts, every
bank is different. Some require you to show up in person to close
an account. Most will allow you to do it long distance. Find out
in advance what you need to do to permanently close your accounts
and how much lead time the bank requires.
"The key is to contact the bank and ask specific
questions about how they would handle your move," says Sterling
Laylock, financial adviser and host of "Building Black Wealth"
on BET's nightly news. As he discovered with one national bank,
relocation is just a matter of changing things in the computer --
unless the customer is moving to or from California. "They're
on a different [computer] system," he says.
And ask if you will be treated as a new account
holder or an existing account holder. That could make a big difference
when it comes to some services, like depositing out-of-town checks.
It's also important to include retirement accounts,
such as IRAs and 401(k)s, in your moving plans. If your employer
sponsors your retirement accounts, and you're not changing companies,
get your new address on the record to make sure your paperwork follows
But if you're leaving your employer, you probably
want to find a new home for your employer-sponsored retirement accounts,
as well, says Barry Picker, CPA and author of "Barry Picker's
Guide to Retirement Distribution Planning." Your employer sets
the rules on this one, so find out what you need to do and how much
time you have to do it.
You also want to talk to your new employer to see
if you can roll your current 401(k) into your new company's retirement
plan. If not, you can put it into a rollover IRA, Picker says.
If you move money, have it transferred directly
from one institution to another to avoid taxes and penalties. "You
don't even want to touch that check," says Picker.
Have personal retirement accounts with a national
money management or brokerage firm? Then it should merely be a matter
of paperwork, says Picker.
But sometimes company politics interfere, says Picker.
If you find that your old branch is making it difficult to transfer
your accounts to a new branch, it might be easier just to switch
companies, he says.
And don't forget the IRS, says Slott. To make sure
that ever-important personal information follows you, forward your
mail and fill out a form 8822, change of address, with the government.
The major mistake that people make when they are moving? "Forgetting
about outstanding checks," says Patricia Howard, manager of
the member administration branch of Navy Federal Credit Union. So
balance your checkbook before you close that account.
People also forget about invisible payments such as
automatic debits to pay bills or services. And the bank or credit
union can't help you on this one. To stop an automatic debit, you
need to contact the vendors and follow their procedures.
If you've asked the bank to make any monthly withdrawals
for Christmas clubs or automatic savings deposits, be sure you've
canceled those as well.
When you move money into your new checking and savings
accounts, have the institution wire it. While many banks recommend
just depositing a check, the funds could be held for a while because
the account is new, says Kelly Erbach, call center manager for the
CUNA Credit Union. Instead, she says, "wire it over, then move."
Dana Dratch is a freelance writer
based in Atlanta.
-- Posted: July 7, 2004