Let It Roll

If you’ve ever attempted to roll over your 401(k), you know it’s no simple two-step. The process is often a daunting one, involving reams of paperwork, arcane language, and an interminable wait. One company, RolloverSystems Inc., promises to change the way rollovers are handled.

According to Reginald “Reggie” Bowser, 37, company founder and CEO, it’s now just as easy to roll over your 401(k) as it is to roll over your cell phone minutes. His product, RolloverMarket, which was launched in March 2003, provides job changers with a free and easy service to reallocate their 401(k) investments to a tax-deferred IRA in less than 25 minutes. With roughly 14 million people who contribute to a defined contribution plan, such as a 401(k) or a 403(b), switching jobs each year, Bowser says the market is growing. He forecasts revenues of $2 million this year for his Charlotte, North Carolina-based company.

The traditional rollover process can take about six to eight weeks and involves five participants, including the investor who is responsible for coordinating communication for the rollover. “A lot of the time that is added to the rollover process results in the plan participant or the investor not knowing how to fill out the documents correctly,” says Bowser. Often the rollover application is returned to the plan participant several times.

As a result, many people cash out, which after income taxes and a 10% federal penalty typically results in a 40% loss of their nest egg. “They don’t do it because they want to; they do it because they don’t know what to do,” says Bowser.

Bowser became familiar with the problems of rollover procedures while developing strategies to capture rollover IRA customers for HorizonGuide, a T. Rowe Price venture, where he served as chief marketing officer. That experience, and his previous position as a founding team member and former vice president of marketing at LendingTree, inspired him to start RolloverSystems.

“From a conceptual perspective, our approach is similar to LendingTree,” says Bowser, who also solicits top-tier financial institutions such as Merrill Lynch and J.P. Morgan Chase & Co. to compete for RolloverSystems users. But with RolloverSystems, once the process is over, it’s finished. And RolloverMarket software only displays offers that meet customers’ investment needs.

Those interested in using RolloverMarket can visit www.rollover market.com or www .rolloversystems.com, but the software is also offered through other venues. Human resources provider Exult Inc. uses the RolloverMarket platform for seven companies that employ 700,000 employees. And the company’s software is integrated into the “Advice and Resources” section at CareerBuilder.com.

The site also features Rollover Basics, which provides visitors with articles about rolling over a 401(k) or 403(b), a glossary that defines terms unfamiliar to the average investor, and an FAQ that answers questions visitors might have about rolling over their plans. The site also provides information about the process for employers.