401k questions, in service rollover

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I manage our family finances - hence I'm posting this question even though it nominally pertains to wifey.

I managed to persuade (had to use up all my "persuasion capital" with her) DW to start participating in the 401k plan offered through Paychex by her employer (a small, ~100ish employee company).
The fund I found is "Schwab S&P 500 Fund (Sel) (SWPPX)" with a "Net Expense Ratio" of 0.03%.

From the face of it - that sounds like a really good, low expense, way to park her money. We were worried about fees and expenses since these payroll providers (ADP more than Paychex - but still!) are somewhat ill-reputed in this regard.

Question 1: Am I missing anything? Any hidden fee? Any specific questions I need to ask to paychex guys (company HR - a one-man part time operation also handling accounting and finances - can't answer anything and always ask to call paychex directly) to discover any gotchas?

I also did some digging about the possibility of in service rollovers. As I had anticipated - it is very difficult to get straight answer from the website. However, I discovered the following verbiage in a section titled "Eligible contribution types for in-service withdrawals":
If your plan allows in-service withdrawals:
For an in-service withdrawal of employee contributions ("in-service employee distribution"), you must have an available balance in at least one of the following contribution types:
Employee pretax, employer QNEC, employee catch-up pretax, military makeup pretax, or non-elective contribution
Contribution types that are not eligible for in-service withdrawals are rollover, Roth 401(k), Roth catch-up, Roth rollover, post-1986 employee after-tax supp, employee loan, and Qualified Domestic Relations Order (QDRO).
Refer to My Account to view your funds and contribution types.


The contribution type shows up as "Employee Pretax" in the My Account page.

Does this mean in-service rollover is allowed? Anyone who has done this before - tips on the specific question(s) I should ask paychex to figure out all the details?

 

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I found this link on the topic of in service withdrawals:LINK
I picked a major plan (the TSP (with already low expense ratios)) that allows them, and found this:  LINK

There seems to be an important age ( post 59 1/2 ) where you can make one while still being employed, roll the funds you want to withdraw into an IRA, and still leave the funds tax deferred.  Anyway, and not a tax expert, but that's the way I read it.
 

puddonhead said:   
If your plan allows in-service withdrawals:
For an in-service withdrawal of employee contributions ("in-service employee distribution"), you must have an available balance in at least one of the following contribution types:
Employee pretax, employer QNEC, employee catch-up pretax, military makeup pretax, or non-elective contribution
Contribution types that are not eligible for in-service withdrawals are rollover, Roth 401(k), Roth catch-up, Roth rollover, post-1986 employee after-tax supp, employee loan, and Qualified Domestic Relations Order (QDRO).
Refer to My Account to view your funds and contribution types.


The contribution type shows up as "Employee Pretax" in the My Account page.

Does this mean in-service rollover is allowed? Anyone who has done this before - tips on the specific question(s) I should ask paychex to figure out all the details?

 

 i believe those are the relevant qualifying words. Your employer decided if you are allowed then or not. In larger employer cases, there's often a committee that decides if it's in the employees' interests to allow features just like what funds the employees get access to or not. Really shitty way the system is set up.  It's just like you realistically have zero options on health insurance plans, you are stuck with whatever crappy HMO/EPO plan your employer deems you worthy of, which they obviously have the sole purpose of picking options where they can decrease their "employer contribution" the most every year without the vast majority of employees noticing the pay cuts, rather than picking the most appropriate coverage options.

The documents from our custodian (TIAA) have similar verbiage to what you quoted, but we definitely do not have any in service rollovers allowed, nor after tax non-ROTH contributions allowed (although there is other verbiage that TIAA allows after tax contributions.)

I think when i last researched, in service rollovers for regular elective employee contributions are not allowed until a late age per IRS.  The only useful possibility to look into is if there employer allows after tax contributions to the plan, and also allows in service rollovers of those funds.  If they allow them, it effectively raises the Roth IRA cap to >$50k - employer contributions per year

Done this, and there are some magic words you need to use.
The great part about in-service through after-tax 401ks is much higher limits.
$53k (across all employer accounts including matches) instead of $18k annually.


-Yes, Paychex is likely charging administrative fees that are separate from the ER of the investment
Ask for a 401k Plan Fee Disclosure statement... the DOL requires them to have one.

- You will need to ask either HR or Paychex for the Summary Plan Description (SPD).
They will send you a 50 page PDF that explain the features your employer chose.
If they didn't check the in-service rollover box, they can sign an 401k amendment, and send to to the employees.

- They can only do in-service rollovers from an "after-tax 401k" subaccount.
Essentially, it follows the rules of a "nondeductable IRA", when you do the rollover into a Roth IRA, you will get a tax statement showing the amount of the rollover and its cost basis, and you must pay tax on the difference.
This is one of those IRA rules designed to keep 401k money with their employer, yet carve out exceptions to managers.

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I went through this with my employer as I wanted to roll my Roth 401k contributions into a Roth IRA. I can do it once a year, but if I choose to do an in service rollover I'll loose the company match for 6 months. Not worth it. I have a plan that if I ever change roles again I'm going to ask them to let me quit for one day and do the rollover.  

Check if this applies to her. They don't like you to take money out while you're actively employed so anticipate not being able to, or them making you not want to.  You'll probably want to call, they make this stuff so hard to parse out.  When they tell you to find your answers in the plan documentation make them show you the page number.



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