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Rolling old 401K into current one the retiring in 2 years
Old 04-28-2014, 01:55 PM   #1
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Rolling old 401K into current one the retiring in 2 years

I have currently been employed by my present employer for a little over 2 1/2 years and plan to work a total of 5 years so that I am vested. My question is can I roll a part of my 401k from a previous employer whom I left at age 50 to my new 401k and take withdrawls at age 58 without penalty per the rule of 55.
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Old 04-28-2014, 03:21 PM   #2
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It is up to your current employer. Different 401(k) plans have different rules.
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Old 04-28-2014, 04:14 PM   #3
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Each employer may have their own distribution rules but the taxes/penalties will be based on tax laws.

It is a good question as IRA's and 401k's have different 72t rules. Once the funds are commingled what law applies?
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Old 04-28-2014, 05:35 PM   #4
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...It is a good question as IRA's and 401k's have different 72t rules. Once the funds are commingled what law applies?
OP is talking about an old 401k to new 401k transfer as I understand his post.

It depends on whether the new 401k allows transfers from old 401ks.
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Old 04-28-2014, 05:53 PM   #5
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OP is talking about an old 401k to new 401k transfer as I understand his post.

It depends on whether the new 401k allows transfers from old 401ks.
Agree. Plus does the new 401k allows for age 55 and terminated from service withdrawls? They don't have to, some allow, some don't, with many variations on what the withdrawls can be.
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Old 04-28-2014, 07:58 PM   #6
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New plan allows it. Will make 3 distributions per year. I just need to know if transferring from the old 401k to the new one will allow me to take disbursements without the 10% penalty since I left the first job at 50. I will probably not have enough in the new plan to fund my retirement from 58 to 59 1/2.
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Old 04-28-2014, 08:11 PM   #7
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It is up to your current employer. Different 401(k) plans have different rules.
There's you answer. Your benefits or hr department should be able to answer, or point you to the Summary Plan Description, or the plan administrator. As travelover said each plan can be different. Just as plans can differ on 55+.
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Old 04-28-2014, 08:24 PM   #8
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Already talked to the plan administrator, but they would not answer any tax related questions. I just need to know if there would be any IRS related issues with rolling the old 401k into the new one and then taking payments from the new one without penalty.
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Old 04-28-2014, 08:29 PM   #9
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New plan allows it. Will make 3 distributions per year. I just need to know if transferring from the old 401k to the new one will allow me to take disbursements without the 10% penalty since I left the first job at 50.
Yes, we did that on the advice of the actuary for our small business plan. DH also has a W2 job and did exactly what you are proposing. If the plan allows it, it is legal with the IRS and the powers that be.

In hindsight, we probably moved too much money out of the older plans as they had some better investment choices. We have been able to cut our expenses quite a bit with more free time to review the budget, comparison shop and more time for DIY. Plus we have pensions and have been working part time. But we wanted to move enough to get us to the 59.5 point with no worries.
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Old 04-28-2014, 09:53 PM   #10
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New plan allows it. Will make 3 distributions per year. I just need to know if transferring from the old 401k to the new one will allow me to take disbursements without the 10% penalty since I left the first job at 50. I will probably not have enough in the new plan to fund my retirement from 58 to 59 1/2.
Check with your plan but I don't think when you left your old job makes a difference. The critical factors are when you leave your current job and whether your current 401k allows penalty free withdrawals for employees leaving after age 55.

The key question is if you take withdrawals after leaving service after age 55 how they will report the distributions on Form 1099-R; with penalty or without.
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Old 04-29-2014, 08:22 AM   #11
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I seem to recall some verbage in IRS Pub 575 that the early distributions before 59 1/2 w/o penalties only applies to the 'current' 401k or qualified plan under employment now and you must turn 55 the year you quit from that employer.

I'm not sure if co-mingling previous funds from a prior 401k by rolling it into your current 401k is allowed - a post above seems to indicate yes.
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Old 04-29-2014, 08:36 AM   #12
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But is the "current" 401k the account balance (including rollovers from previous employer plans) or only the portion of the account balance arising from your period of employment with the current employer? I suspect the former as I think it would be too cumbersome to track old money and new money and growth, especially if one does periodic reallocations for AA purposes but the only way to find out for sure is to ask the plan administrator.
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Old 04-29-2014, 10:31 AM   #13
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We received a 1099R from Fidelity with a box checked for no penalty due. I have never heard of any exception for comingled funds from prior rollovers or any tax form that would exclude rolled over funds from the penalty free 401K withdrawals for those 55 or older at the time of separation of service. The pension consultant we use for our small business and the retirement experts at Fidelity all told us it was fine to do the rollovers prior to DH's retirement.
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Old 04-29-2014, 10:56 AM   #14
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Kinda what I was thinking. Thanks for all the info
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Old 04-29-2014, 09:01 PM   #15
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Isn't the penalty free at age 55 rule governed by IRS pub 575, not the 401 plan itself?

Additional exceptions for qualified retirement
plans. The tax does not apply to distributions that are:
From a qualified retirement plan (other than an IRA)
after your separation from service in or after the year
you reached age 55 (age 50 for qualified public safety
employees)...
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Old 04-29-2014, 10:42 PM   #16
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No, it depends on whether or not the plan made certain amendments when the law changed a number of years ago.

Also see post 12 of this thread: ER and 401k distributions before 59 1/2
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