May I convert my old 401Ks to an IRA?

[RayMetz100]

I have 3 small 401Ks now. Two are from past employers and one I'm still contributing to with my current employer. I'd like to roll one of my old ones into a new ScottTrade IRA account. May I do that even though I qualify for my current employer's 401K?

I think there's some rule saying you can't contribute to an IRA if your employer offers a 401K. In this case, I wouldn't be contributing to the IRA, just transfering to an IRA. Can someone send me a link to an IRS FAQ page answering this question? Any reputible source is better than nothing.

Thanks,

Ray Metz

 

[usc_et]

Yes you can rollover the two 401ks that are from past employers. The rule that you are referring to says that, above certain income levels, you cannot make a tax deductible contribution to an IRA while you qualify for a retirement plan at work. Rollovers are completely different from contributions. If you need to hear it from the source go to the irs web site at www.irs.gov. and type in key word, "IRA"

 

[RayMetz100]

Thanks!

 

[Martha]

Also, the appropriate publication on the IRS web site is pub 590. http://www.irs.gov/publications/p590/

 

[Craig]

I've generally transferred into an IRA in such circumstances. However, check one thing before you jump ... I have one 401K account that includes a successful mid-cap fund that is closed to new investors. I like having access to this, and wouldn't if I rolled the 401K. An exception to the rule.

Vanguard, Schwab, Fidelity can easily handle the details for you. Good luck.

 

[mickeyd]

Charles,

One negative aspect of staying with your old 401(k) plan after leaving the employer is that there are some hidden expenses, outside of the actual MF that your funds are in, that you may not actually be aware of.  There extra expenses that fund the fees that the TPA charges the employer (normally passed on to the employees). If you care about ER, you may dig a little deeper into the plan document of the 401(k) to get your hands around the real costs or call the employer to find out about them.

Another negative is that the employer can delete the specific fund that you like any year that he wants to.