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Re: Can I roll over 401k funds while still employed?
Old 10-25-2006, 03:20 PM   #21
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Re: Can I roll over 401k funds while still employed?

I once worked for a 401k recordkeeper so I have some insight.

The only way to know is to ask the plan recordkeeper. If they say no then 99% chance that means no. If you want to check to see if they set up the plan incorrectly in their database ask for the plan document (not the SPD, it should be ~70 pages). This will list all the plan rules. Some plans will allow for pre 59.5, pre term of employment distributions. But not many. Any non hardship, non load withdraw can be rolled over without the 20% withholding.
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Re: Can I roll over 401k funds while still employed?
Old 10-25-2006, 03:36 PM   #22
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Re: Can I roll over 401k funds while still employed?

I have learned from two different investment companys that there is no law or regulation to keep someone from rolling over 401(k) funds while employed. If there is a hitch, it would be from the plan itself. I am going to contact my plan administrator and find out if the plan allows the rollover, and what restrictions there might be if any. I will not be able to do that until next week. I'll let ya'll know how it goes. Thanks everyone for your suggestions and comments, and keep 'em coming if you have anything to add.
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Re: Can I roll over 401k funds while still employed?
Old 10-25-2006, 03:54 PM   #23
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Re: Can I roll over 401k funds while still employed?

"Rollover IRA's" seems to be a term of art. Some 401k's allow you to roll over a rollover IRA (containing ONLY a 401k rollover from a previous employer) into a new 401k when you begin employment. You may want to do this if you have access to great funds in the new 401k. If you commingle traditional IRA contributions in with your rollover IRA containing only money from a 401k, then you can't roll the rollover IRA back into a 401k.
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Re: Can I roll over 401k funds while still employed?
Old 10-25-2006, 04:03 PM   #24
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Re: Can I roll over 401k funds while still employed?

Quote:
Originally Posted by boutros
I once worked for a 401k recordkeeper so I have some insight.

The only way to know is to ask the plan recordkeeper. If they say no then 99% chance that means no. If you want to check to see if they set up the plan incorrectly in their database ask for the plan document (not the SPD, it should be ~70 pages). This will list all the plan rules. Some plans will allow for pre 59.5, pre term of employment distributions. But not many. Any non hardship, non load withdraw can be rolled over without the 20% withholding.
boutros,
Thanks for the info. I have never seen the plan document, but I think you are right that I should check it out. A statement from the SPD: If there are any differences between this description and the terms of the plan document, the terms of the plan document will govern.

So.... it would appear reading this particular SPD is worthless in determining anything.
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Re: Can I roll over 401k funds while still employed?
Old 10-25-2006, 04:10 PM   #25
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Re: Can I roll over 401k funds while still employed?

Quote:
Originally Posted by justin
"Rollover IRA's" seems to be a term of art. Some 401k's allow you to roll over a rollover IRA (containing ONLY a 401k rollover from a previous employer) into a new 401k when you begin employment. You may want to do this if you have access to great funds in the new 401k. If you commingle traditional IRA contributions in with your rollover IRA containing only money from a 401k, then you can't roll the rollover IRA back into a 401k.
Justin, That is great to know. I have been planning to take a poorly performing IRA, and add that to the 401k rollover. My plans just changed after reading your post. Thank you
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Re: Can I roll over 401k funds while still employed?
Old 10-25-2006, 04:46 PM   #26
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Re: Can I roll over 401k funds while still employed?

Quote:
Originally Posted by justin
If you commingle traditional IRA contributions in with your rollover IRA containing only money from a 401k, then you can't roll the rollover IRA back into a 401k.
This is no longer the case. Commingled (pre-tax) funds are now allowed in a "rollover" or traditional IRA, which can then be rolled to an employer 401k, plan permitting.



Edit: http://www.irs.gov/newsroom/article/...105147,00.html

"IRA assets may be rolled over to employer plans even if they did not come from another employer plan. Employees who roll over employer plan distributions into an IRA no longer have to keep that IRA separate – a “conduit IRA” – in order to do a future rollover to another employer’s plan. "

http://www.irs.gov/publications/p590/ch01.html#d0e4374
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Re: Can I roll over 401k funds while still employed?
Old 10-25-2006, 08:55 PM   #27
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Re: Can I roll over 401k funds while still employed?

Quote:
Originally Posted by Martha
Hum. Hum. I am thinking of backtracking a bit on my answer. I have never seen or heard of a plan that allowed rollover distributions before age 59.5, death, or termination of employment. But I wonder if that is a general plan provision or a regulation. Now that I look through pubs 575 and 590, the answer isn't so clear. If I am motivated, I may read the regs tomorrow. Nevertheless, odds are the plan doesn't allow such a rollover. Every summary plan description I have read doesn't allow it.
Sorry, Martha for picking on your response......... I usually swear by whatever you say, but this time I know better. As others have indicated, a rollover from a 401k to an IRA is determined by the 401k plan administrator. My plan allows the rollover and I have done several. This is handy as you are no longer limited to the investments in the 401k. It is also very beneficial because early IRA distribution (pre-59.5) are excepted from penalty when used for dependent college expense (which is why I use this procedure). My 401k is managed by Fidelity and I have established a Rollover IRA with them as well. Every semester I rollover a portion of the kids tuition expense into the IRA bucket and then withdraw without penalty

I use the broker to broker process to eliminate witholding and the paperwork I get from the plan administrator and turbotax easily account for the rollover taxwise
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Re: Can I roll over 401k funds while still employed?
Old 10-26-2006, 10:22 AM   #28
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Re: Can I roll over 401k funds while still employed?

Quote:
Originally Posted by jazz4cash
Sorry, Martha for picking on your response......... I usually swear by whatever you say, but this time I know better. As others have indicated, a rollover from a 401k to an IRA is determined by the 401k plan administrator. My plan allows the rollover and I have done several. This is handy as you are no longer limited to the investments in the 401k. It is also very beneficial because early IRA distribution (pre-59.5) are excepted from penalty when used for dependent college expense (which is why I use this procedure). My 401k is managed by Fidelity and I have established a Rollover IRA with them as well. Every semester I rollover a portion of the kids tuition expense into the IRA bucket and then withdraw without penalty

I use the broker to broker process to eliminate witholding and the paperwork I get from the plan administrator and turbotax easily account for the rollover taxwise
No problem with picking on my response. Hey, I was backtracking on my original reponse anyway. My experience was in fact limited due to the plans which I have seen which did not allow "in-service" rollovers before age 59.5. But you are right; it is not an IRS rule, but a common plan provision. If your plan doesn't prevent in service rollovers and the administrator is willing to allow the rollover, great. Actually, I wonder if the prohibition is more common in smaller employer plans because they want to keep the balances high to get a good deal from the plan provider. There isn't quite the same worry with the bigger employers.


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Re: Can I roll over 401k funds while still employed?
Old 10-26-2006, 10:51 AM   #29
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Re: Can I roll over 401k funds while still employed?

Quote:
Originally Posted by Martha
My experience was in fact limited due to the plans which I have seen which did not allow "in-service" rollovers before age 59.5. But you are right; it is not an IRS rule, but a common plan provision. If your plan doesn't prevent in service rollovers and the administrator is willing to allow the rollover, great.
Fell into exactly the same situation Martha. DW's 403(b) plan did not allow pre 59.5 in-service rollovers and all the reading and research I did seemed to indicate that was the rule common to all plans. For example, the "403(b)wise" web site states that a qualifying event must occur to allow an in-service rollover. And when I contacted Vanguard and Schwab to ask about setting up an IRA acct to roll the 403(b) to, they both indicated they would be glad to set up the account but that the 403(b) administrator would not allow the direct transfer without a qualifying event. Given the consistency of this information, I assumed that it must stem from an IRS rule common to all.

I suppose the bottom line is the same. If the 401/403 plan won't allow it, you' d still have a David and Goliath battle royal to get the policy changed whether it is an IRS rule or not. I'll be interested in hearing if anyone is successful in getting the rule for their plan changed or in getting a personal exception for themselves.

A lesson learned is that for 403(b) participants, who frequently have a wide selection of providors to chose from, the ability to do in-service transfers without a qualifying event would be a plus. I'm sure it never crossed DW's mind 30 years ago when she made her selection.
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Re: Can I roll over 401k funds while still employed?
Old 10-27-2006, 07:10 PM   #30
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Re: Can I roll over 401k funds while still employed?

Quote:
Originally Posted by Martha
If your plan doesn't prevent in service rollovers and the administrator is willing to allow the rollover, great. Actually, I wonder if the prohibition is more common in smaller employer plans because they want to keep the balances high to get a good deal from the plan provider. There isn't quite the same worry with the bigger employers.
I think thats basically correct.........bigger companies have more leverage with the fiduciary, but I also believe some companies (large and small) just don't bother to negotiate a good arrangement for thier employees.

It seems like 99% of the population is convinced that 59.5 is the magic number and nothing can happen prior without paying a penalty, so folks don't bother to reseach the 'exceptions'.
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Re: Can I roll over 401k funds while still employed?
Old 10-27-2006, 07:23 PM   #31
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Re: Can I roll over 401k funds while still employed?

Quote:
Originally Posted by jazz4cash
I think thats basically correct.........bigger companies have more leverage with the fiduciary, but I also believe some companies (large and small) just don't bother to negotiate a good arrangement for thier employees.
When I managed our firm we changed plan providers. One of the keys to getting a good deal for us and our employees was having more than X many million dollars in our plan. Given that we are a relatively small group, around 75 people, we had an incentive to keep people in the plan; especially those with big accounts.

But yes, I think there is a lot of not bothering to look at these types of issues.
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Re: Can I roll over 401k funds while still employed?
Old 10-27-2006, 11:26 PM   #32
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Re: Can I roll over 401k funds while still employed?

Quote:
Originally Posted by jazz4cash
It seems like 99% of the population is convinced that 59.5 is the magic number and nothing can happen prior without paying a penalty, so folks don't bother to reseach the 'exceptions'.
I don't think it's so much that 99% of the population is convinced that 59.5 is the magic number, but rather that 99% of the plans have that requirement written in. In my case, I did the research, DW's plan has the 59.5 or a qualifying event requirement. My mistake was thinking it stemmed from an IRS rule, where it was only a plan rule. The outcome was the same either way however.

As I said in an earlier post, it would be interesting to know what percentage of plans allow rollovers without a qualifying event and what the details of the rollover provisions are. For example, could you do a rollover monthly or at every paycheck?

I'd also be interested in knowing if anyone is successful in getting a plan changed from having a qualifying event rule to not having one, or in getting an exception made for themselves.
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Re: Can I roll over 401k funds while still employed?
Old 10-28-2006, 12:06 AM   #33
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Re: Can I roll over 401k funds while still employed?

Quote:
Originally Posted by youbet
I don't think it's so much that 99% of the population is convinced that 59.5 is the magic number, but rather that 99% of the plans have that requirement written in. As I said in an earlier post, it would be interesting to know what percentage of plans allow rollovers without a qualifying event and what the details of the rollover provisions are. For example, could you do a rollover monthly or at every paycheck?
Well actually 59.5 is the magic number for withdrawal as set by IRS, not the employer, but I guess people assume that moving the funds from a 401k to an IRA is a "withdrawal", but its actually a rollover. The employer can decide wheather to allow a rollover or not. Some employers may be attempting to "protect" employees by restricting rollovers. It pays to read the fine print in the plan summary.

My employer uses Fidelity and they love it when I move funds from the Fidelity 401k to the Fidelity IRA.......sometimes its the same mutual fund. I have moved about twice a year and I think there are no limitations on this. Since Fidelity is full service, they seem to view it as an opportunity to market all of thier services. I wonder if my employer is paying for the service or being paid for the referral..........think I'll call and ask them about this.

What qualifies as a life event?
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Re: Can I roll over 401k funds while still employed?
Old 10-28-2006, 12:20 AM   #34
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Re: Can I roll over 401k funds while still employed?

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Originally Posted by jazz4cash
Well actually 59.5 is the magic number for withdrawal as set by IRS, not the employer, but I guess people assume that moving the funds from a 401k to an IRA is a "withdrawal", but its actually a rollover. The employer can decide wheather to allow a rollover or not. Some employers may be attempting to "protect" employees by restricting rollovers. It pays to read the fine print in the plan summary.
Actually what we were discussing were rollovers, not withdrawals.
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Re: Can I roll over 401k funds while still employed?
Old 10-28-2006, 02:10 AM   #35
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Re: Can I roll over 401k funds while still employed?

Quote:
Originally Posted by jazz4cash
What qualifies as a life event?
Quitting, getting fired, reaching 59.5, retiring, and death (oxymoron) as I've gathered from this post and elsewhere. I was not able to actually find a list though.
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Re: Can I roll over 401k funds while still employed?
Old 10-28-2006, 04:22 AM   #36
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Re: Can I roll over 401k funds while still employed?

Here's what I've learned about my plan this week. I'm paying:

Fund #1 2.29% expense ratio and a 1% deferred fee
Fund #2 2.25% expense ratio and a 1% deferred fee
Fund #3 2.20% expense ratio and a 1% deferred fee

Even if I can rollover $, I don't feel like paying 1% every time I do it. I think I will lobby my company for a better plan. I hate to keep paying into this plan. Any thoughts on how I should proceed?
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Re: Can I roll over 401k funds while still employed?
Old 10-28-2006, 08:50 AM   #37
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Re: Can I roll over 401k funds while still employed?

Quote:
Originally Posted by livnlow
Here's what I've learned about my plan this week. I'm paying:

Fund #1 2.29% expense ratio and a 1% deferred fee
Fund #2 2.25% expense ratio and a 1% deferred fee
Fund #3 2.20% expense ratio and a 1% deferred fee

Even if I can rollover $, I don't feel like paying 1% every time I do it. I think I will lobby my company for a better plan. I hate to keep paying into this plan. Any thoughts on how I should proceed?
First--yes, absolutely lobby for a better plan. Second--does your company match enough to pay these expenses? If so, I would worry about it less.

PERSONAL ASIDE
My plan expenses weren't too bad, but I had no match at all--I asked about that and was told (a) we had stock options instead, and (b) they only started the 401k plan less than a year before I was hired and were hoping to do matching in the future. That never happened, we were derailed by the tech wreck. (Lucky for me--unlike many others--I exercised my options the day I was hired and sold most of the vested shares before the debacle...not at the peak, but close enough to help me FIRE )
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Re: Can I roll over 401k funds while still employed?
Old 10-28-2006, 11:15 AM   #38
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Re: Can I roll over 401k funds while still employed?

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Originally Posted by astromeria
First--yes, absolutely lobby for a better plan. Second--does your company match enough to pay these expenses? If so, I would worry about it less.

PERSONAL ASIDE
My plan expenses weren't too bad, but I had no match at all--I asked about that and was told (a) we had stock options instead, and (b) they only started the 401k plan less than a year before I was hired and were hoping to do matching in the future. That never happened, we were derailed by the tech wreck. (Lucky for me--unlike many others--I exercised my options the day I was hired and sold most of the vested shares before the debacle...not at the peak, but close enough to help me FIRE )
astromeria, there is a three % match so it amost covers the fees. If I can get my money out by the end of the year though, I will have paid about $3400.00 in fees just for this year. In about three years, that will probably double. So, short term, I think I need to get my money out of purgatory ASAP, and then start working on getting a better plan so I'm not in this position anymore. I ran a calculator on a competing fund's website, comparing my funds to all of their funds in the same categories. The performance delta for just $10,000.00 for the last five years was very eye opening. The only good thing is that I am finding out now instead at retirement age.

Glad to hear you got out of your plan at the right time.
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Re: Can I roll over 401k funds while still employed?
Old 10-28-2006, 11:59 AM   #39
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Re: Can I roll over 401k funds while still employed?

Alright, all this talk about plans made me think about "The Plan". Enjoy.



Quote:
In the beginning, there was the Plan.

And then came the Assumptions.

And the Assumptions were without form.

And the Plan was without substance.

And darkness was upon the face of the Workers.

And they spoke among themselves, saying, "It is a crock of sh**, and it
stinks."

And the Workers went unto their Supervisors and said, "It is a pail of
dung, and we can't live with the smell".

And the Supervisors went unto their Managers, saying, "It is a container of
excrement, and it is very strong, such that none may abide by it."

And the Managers went unto their Directors, saying, "It is a vessel of
fertilizer, and none may abide its strength."

And the Directors spoke among themselves, Saying to one another, "It
contains that which aids plant growth, and it is very strong."

And the Directors went to the Vice Presidents, saying unto them, "It
promotes growth, and it is very powerful."

And the Vice Presidents went to the President, saying unto him, "This new
plan will actively promote the growth and vigor of the company with very
powerful effects."

And the President looked upon the Plan and saw that it was good.

And the Plan became Policy.

And this is how sh** happens...
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Re: Can I roll over 401k funds while still employed?
Old 10-28-2006, 03:25 PM   #40
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Re: Can I roll over 401k funds while still employed?

livnlow,

You're only putting in 3% to get the 3% match, right?
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