Rolling 401K over to IRA while Still Employed

[oceanmd]

Hello,
Please tell me what you think about this plan.
DW is still working and has been contributing to Roth 401K for a few years now. Before that, she was contributing to 401K pre-tax.
We are not happy with high fees and limited options.

We would like to roll all pre-tax 401K money into tIRA, and Roth 401K into Roth IRA while she is still employed.

She would still like to keep 401K account active at work and keep contributing to it, she is contributing the maximum allowed amount.

What do you think about this plan? It this combination of employer’s 401K and IRA possible?

Thank you very much for your suggestions and advise.

[madatrub]

Have to check her plan rules. My 401k does not allow any roll over while employed, except for after tax contributions.

[GalaxyBoy]

Yes, it all depends on the plan’s rules. If allowed, I agree that would be a good approach. When I was w*rking my 401(k) plans all sucked, but none of the plans’ documents allowed for an in-service rollover.

[Out-to-Lunch]

How old are you each and when do you plan to retire?

If you plan to retire early, note that you can get money free of penalty from your 401(k) if you retire in the year you turn 55 (or later). This is not true of an IRA.

[Montecfo]

Quote:

Originally Posted by oceanmd Hello, Please tell me what you think about this plan. DW is still working and has been contributing to Roth 401K for a few years now. Before that, she was contributing to 401K pre-tax. We are not happy with high fees and limited options. We would like to roll all pre-tax 401K money into tIRA, and Roth 401K into Roth IRA while she is still employed. She would still like to keep 401K account active at work and keep contributing to it, she is contributing the maximum allowed amount. What do you think about this plan? It this combination of employer’s 401K and IRA possible? Thank you very much for your suggestions and advise.

Yes. The tax rules allow for it. Your plan may or may not.

I did an in service withdrawal of my entire balance before I retired because I was the administrator and I did not know the company's succession plan.

I continued to contribute and thus reduced the amount subject to any delays.

This is after 591/2.

[jazz4cash]

Yes, if your plan permits it can be a very good move. I made many rollovers to purchase CD promo deals while activelt employed. Fidelity managed my 401k so I also did rollovers to Fidelity IRAs so when I login both accounts are visible.

[t-bone]

Given the poor investments options offered by a typical 401(k), it is indeed a good move [once again, if your plan permits]. I started transferring money from my 401(k) recently. Pre-tax goes to "rollover" IRA and post-tax to Roth IRA. I do not leave money sitting in my 401(k) anymore. All accounts managed by Fidelity; makes the transactions a breeze.

[MRG]

I was able to do this, as said, it's dependent on the plan.

[Koolau]

Once Megacorp changed their rules on 401(k) and allowed roll-overs to tIRAs, I did so. Eventually, I moved it all back. YMMV

[oceanmd]

Thank you for all replies, very interesting, different experiences, especially rolling the money back from IRA to 401K.
DW checked on the rules, and it is allowed. So we are going to rolllover both pre-tax and Roth. She is not planning on taking any distributions before 59 and a half.
After the rollover is complete, will she be able to start taking distributions from IRA after 59 1/2 ?