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I would like to roll 401K funds into an IRA. My employer's 401K options are extremely limited. Do I need to leave my job to be able to roll over funds from my 401K? Is my 401K captive as long as I work for my employer? Has anyone out there rolled over a 401K without leaving there job?
Posted July 02, 2008 (02:18PM)
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I think it depends on your employer and your status. At my company, you can "quasi-retire" and roll your 401K into an IRA, but you have to meet certain service and age requirements.
Posted July 02, 2008 (03:22PM)
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I am not talking about retiring or quasi-retiring. I simply want to roll funds into an IRA before being laid off, an act which is allowed after being laid off. There is absolutely no restriction on 401K to IRA rollover based on age. I don't see why being an employee should eliminate rights to invest my saved earnings how I wish. I spoke with my 401K administrator, who said, they can't roll over a 401K int an IRA until 30 days after my employement has been terminated due to IRS regulations. I can understand what the 401K administrator's interest is. However, since the IRS allows rollovers from 401K to IRA, I don't see why the IRS would have any interest in prohibiting 401K to IRA rollovers discriminating against the employed. I don't believe there is an IRS regulation prohibiting 401K to IRA rollovers while employed. I can't find any such prohibition of rollovers in IRS publications. http://www.irs.gov/retirement/participant/article/0,,id=151787,00.html http://www.irs.gov/pub/irs-pdf/p575.pdf Does anyone know how I can find the federal code which defines restrictions or lack of restrictions on 401K to IRA rollovers?
Posted July 03, 2008 (07:27PM)
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I understand that you're not looking to retire, just saying how it works at my company. With "quasi-retirement" we don't really retire, we just get to take out our benefit. I believe much of this has to do with employer benefit definitions.
I also can see a problem with letting employees roll their 401K over to an IRA "at will" because of contribution limits. You're allowed $15,500 in your 401K for '08 and only $5000 in your IRA. If employees regardless of age or status can roll their 401K over at will, you're essentially creating a loophole in that limit. A loophole that folks without a 401K plan can't get into.
This is going get me started on IRA limits being so low and 401K limits being so high... kind of messed up, considering folks with jobs that don't provide 401K plans probably have a much greater need to save for retirement.
Posted July 03, 2008 (07:53PM)
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A rollover is not a contribution. I have rolled over $20,000 from a 401K to an IRA after leaving a previous employer 8 years ago. A roll over is a move from one plan (401K) to a like plan (IRA). A contribution does not come from a plan.
Posted July 03, 2008 (08:59PM)
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Okay, the magic search term is "in-service rollover!" According to Forbes, a partial rollover I would like to do is legal. "Another strategy: roll over part of your money. Jeffrey Bryant, a 56-year-old senior business analyst at PG&E in San Francisco, rolled part of his 401(k) into an IRA so he could invest in seven funds from Dimensional Fund Advisors, including small-capitalization and value funds; there were no comparable offerings in his company plan."
Posted July 04, 2008 (01:30PM)
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You can typically only rollover your funds, as a full time employee, if your plan permits an inservice distribution. Most plans are limited and require that you reach age 59 1/2 before you can do this. Check the plan document (Summary Plan Description) that the employer will provide to you if you request (they must comply with your request). Otherwise you must leave your funds in the plan or leave your job.
Posted July 05, 2008 (10:19AM)
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Thank you RetireOn Time and JAWCLU for your responses. JAWCLU, my employer changed plan adminstrators a little over a year ago. It will seem quite arbitrary to me to have my retirement investment options restricted by plans that arbitrarily change. I sure didn't like being falsely told the IRS restricts my options. It felt like the 401K admistrator was being deceptive. However, if the plan summary allows in-service rollover, then I should be able to cut through any deception quickly. There will be more of a challeng if the plan mentions nothing of it, not prohibiting or allowing.
Posted July 05, 2008 (03:26PM)
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Wow, my employer plan summary says we can do in-service direct rollovers to an IRA once a quarter with no penalty or age limit! However, JP Morgan doesn't want to cooperate.
Posted July 11, 2008 (01:43AM)
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