Capitalize Review: Pros, Cons, And Alternatives

Capitalize is a service that helps you rollover your old employer 401k when you leave your job. They also help with rollovers from 403(b), 457(b), 401(a), and TSP plans into IRAs. 

Capitalize is generally free for most customers.

Rolling over a 401(k) from your old employer to a new financial institution can seem like a lot of work. There’s also penalties and tax implications to be aware of if it isn’t done right.

 You can hire a financial advisor to help you through this process. But that can be costly. Alternatively, you can sign up with Capitalize.

Capitalize is a free service that walks people through the rollover process. You might wonder how they make money. We’ll cover that and more in our full Capitalize review below.

What Is Capitalize?

Capitalize (Capitalize Money, Inc.) is a fintech that helps people rollover their 401(k)s or 403(b)s. It was founded in May 2019 and is based in New York City. Its founders are Christopher Phillips and Gaurav Sharma (CEO).

Capitalize has raised over $30 million in funding since launching in 2020, and has been recognized as one of TIME’s 100 Best Inventions, a World Changing Idea by Fast Company, and a Forbes Top 50 Fintech.

What Does It Offer?

Capitalize helps people rollover their 401(k)s. It does this at no cost. However, if a person decides to go with one of the IRA providers on the Capitalize platform, the company will receive a commission.

Capitalize will find your 401(k) or 403(b) at your old employer and walk you through the process of rolling it over to another financial institution. Capitalize currently only supports rolling a 401(k) into an IRA.

An IRA usually costs less to maintain than a 401(k) and typically has more investment options. However, if you already have a new 401(k) with your new employer, note that Capitalize won't be able to help you roll your old 401(k) into it.

Fully Hands-Off Experience

If you’ve never done a 401(k) rollover before or don’t want to do it by yourself, Capitalize might be the answer. You’ll have someone available to see you through the entire process.

Don’t know which institution manages your 401(k)? No problem. All you have to do is tell Capitalize which company you worked for and it will take it from there. If it can't immediately find your 401(k) provider using its database, its human experts will track it down. 

Once your 401(k) has been found and you've chosen a new IRA provider, Capitalize will take care of all the administrative paperwork for you. They'll keep you updated throughout the process and will let you know once everything is completely set up.

Generally Free To Use

The vast majority of customers pay no fee to use Capitalize. This is because Capitalize partners with various IRA providers that cover the costs.

However, there are cases when you may have to pay. There are two options:

1. Use Capitalize’s Basic Rollover package, which remains free - this is a self-guided rollover process where customers essentially DIY
2. Pay for the Premium experience - if a customer feels like they need the premium experience and wants to roll into a non-partner IRA, then they’re presented with the option to pay a small fee for that.

The vast majority of customers use the free service.

Capitalize has built partnerships with traditional, Roth, and self-directed IRA providers. It works with both DIY stock brokers as well as robo-advisor platforms. 

It's unclear how many partners that Capitalize works with. But here are a few names that we came across during our test:

• Charles Schwab
  
• E*TRADE
• Vanguard
• Fidelity
• Betterment
• Wealthfront
• SoFi
• Alto
• Merrill Lynch

Depending on the IRA provider that you choose, it may have its own fees. You’ll have to check with them on the details. Note that even if you don’t choose to go with one of the Capitalize IRA providers, they'll still help you for free.

Lack Of Info On Security

Capitalize doesn't say how they're securing your information or how much is being transitioned to any potential IRA provider. For a platform that deals with a lot of sensitive personal information, we'd like to see a dedicated page that fully details their security practices.

Are There Any Fees?

You don't have to pay anything to use Capitalize. The basic rollover option is free. However, there are paid upsells: Capitalize Plus (a membership service), 401(k) Finding, and Premium Rollover (a one-time fee).

The Capitalize Plus membership includes all paid products, and is available for $44.99/quarter or $139/year.

For Premium rollovers, customers pay $60/premium rollover or $75 for unlimited premium rollovers during a 6 month period.

• The Basic 401(k) Search package is available to customers who are not already processing rollover transactions with us for $19.99, and includes 401(k) institution results based on the list of companies they provide us as well as a search for accounts based on their personal information that we scan across institutions. Customers who are already processing a rollover transaction with us get this functionality for free.
• The Premium 401(k) Search & Recovery package includes the institution results available in the Basic plan, in addition to a deeper search by our team of experts to locate the 401(k) plan for additional employers that are not already in our database, and expert availability to help claim missing 401(k)s identified by our search efforts. This package is available for $49.99.

How Do I Contact Capitalize?

Capitalize doesn’t list a phone number. Once you click to get started, you’ll see a chat link. You can also contact them through the website’s contact form. I also found [email protected] on their legal page.

Capitalize does have a social media presence on Twitter, Facebook, and LinkedIn. And it has an impressive 4.8/5 customer rating from 2,467 reviews on Trustpilot.

How Does Capitalize Compare?

Capitalize really only has one direct competitor - Meet Beagle. However, Meet Beagle isn't 100% free like Capitalize - they charge a $3.99/mo fee. In exchange for the fee, they will also help you manage your 401k and even provide loans if needed.

You can also ask the 401(k) administrator with your old employer to help you. But their responsibility will stop at getting the money out. That leaves you to take control of the transition to the new financial institution. You can then ask the new financial institution for help getting the money into their firm (and most firms are happy to handle it for you when you're bringing your money into their institution).

Generally, a 401(k) rollover isn't difficult. But it's important that the rules are followed so you don't incur penalties or create a taxable event. For people used to managing their money, rolling over a 401(k) will probably be a walk in the park. But for those who aren't typically as hands-on with their finances, it can seem overwhelming.

If you're simply looking for resources that can assist you in choosing your new IRA provider, we can help with that. If you're mostly looking to invest in stocks and bonds, check out our top Traditional and Roth IRAs. If you want more investment flexibility, check out our favorite self-directed IRAs. 

How Do I Open An Account?

To open an account, visit HiCapitalize.com. You’ll see "Get Started" buttons on the website. The account opening process has three main steps:

The process should take no more than five minutes. Expect to provide sensitive information, similar to what you might provide when opening a bank account. Income information is not required.

Is It Safe And Secure?

While the Capitlize.com site is encrypted, the company doesn’t disclose how your information is passed to IRA providers.

Capitalize doesn’t hold any of your money as an investment or on deposit. It also doesn’t provide financial advice. For these reasons, Capitalize does not need to be FDIC or SIPC insured.

Is It Worth It?

If you manage your finances daily, you probably know exactly where all of your money is, including your retirement accounts. In fact, you may have already done a 401(k) rollover in the past due to changing employers. For people like you, there may be little benefit to using Capitalize other than saving you a little bit of time.

But using Capitalize may be a no-brainer for anyone who's never done a 401(k) rollover or who feels intimidated by the process. You'll have someone to walk you through each and every step. Plus, you'll gain peace of mind knowing that all the necessary paperwork is being handled correctly. And, best all of, it won't cost you a penny.

Check out Capitalize here >>

Capitalize Features