Has anybody transferred a portion of their 401(k) plan to a personal IRA account while still being employed at the company that sponsors it? Also, after doing such a transfer, can they still participate in the 401(k)?
The reason why I ask is a few years ago I combined money in a personal IRA plan I had into my 401(k). I'm thinking what would be wrong with doing that the other way. Other reasons for transferring would be a person may be interested in different investments not offered by their 401(k), or they just want to have the funds elsewhere to qualify for some benefits by having a higher balance on deposit.
The way I'm reading the rules of my 401(k), is it looks like the money needs to stay put either until I retire or leave, or under other provisions (loans, etc.). But no transfers out to an IRA while I'm there.
cliffedelgado said: I think you're looking for what's called an "in-service withdrawal". It's allowed by the IRS but not all 401k plans have it.
Thanks. Just checked my plan and I would need to wait until I'm 59 1/2 to do that.
vstrt
Senior Member
posted: Nov. 25, 2009 @ 8:59p
Only in a Corprotocracy do such stupid rules exist whereby an employer can prevent someone from withdrawing their own money.
401ks are bull****!
xerty
Senior Member - 2K
posted: Nov. 25, 2009 @ 11:52p
cliffedelgado said: I think you're looking for what's called an "in-service withdrawal". It's allowed by the IRS but not all 401k plans have it. And you can't do it with your pre-tax money before quitting, 59.5, death or disability. You might be able to get a hardship withdrawal, but that can't go into your IRA (and you'll pay taxes and likely penalties on it). The main things you are allowed to withdraw/rollover to your IRA are employer contributions and after-tax employee contributions to the 401k. These are allowed by law, but may not be allowed by your plan.
vstrt said: Only in a Corprotocracy do such stupid rules exist whereby an employer can prevent someone from withdrawing their own money.
401ks are bull****!Actually, thank congress for the tax laws they write and vote on.
babo
Senior Member
posted: Nov. 27, 2009 @ 12:16a
don't thank congress - thank you yourself - you vote these guys in and don't care what they do everyday. This is the huge problem with the system we have - ppl don't care ( in majority) of what representatives are doing until it's too late.. oh well
not to hijack he topic : usually - you can't, it's all up to the rules of your particular plan.
couponhed
Senior Member
posted: Nov. 27, 2009 @ 7:58a
theman2 said: vstrt said: Only in a Corprotocracy do such stupid rules exist whereby an employer can prevent someone from withdrawing their own money.
401ks are bull****!Actually, thank congress for the tax laws they write and vote on.
Actually, tax law allows in-service rollovers of 401ks. The problem is that 401k plan administrators don't like having people take their money out because they lose the ability to charge their overinflated fees on the balance.
I suppose congress could have required that 401k plan administrators allow in-service rollovers, but some folks would have screamed socialism at the regulation of financial corporations.
adavypromos
Member
posted: Dec. 7, 2009 @ 4:38p
@xerty: are you sure we can withdraw employer matching penalty free? My understanding was we can only rollover after tax 401K contributions since these cannot legally stay in a tax preferred account since they are in excess of the 401k limits (16.5K). And this was how people got around the 5K limit on IRAs, i.e contribute 49K into 401Ks each year and then rollover the excess (49K-16.5K-employer match) into Roth IRA to effective raise the Roth IRA limit from 5K to ~37.5K. Am I wrong here?
couponhed said: The problem is that 401k plan administrators don't like having people take their money out because they lose the ability to charge their overinflated fees on the balance.Not all of us have "overinflated fees" as part of our 401(k)'s. In fact, as I've previously mentioned, my 401(k) gives me access to share classes that are head and shoulders cheaper than anyhing available to retail investors. I still cannot do in-service withdrawals, however, although even if I could, I'd have no reason to exercise this option.
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