rolling personal not rollover ira to company 401k

[mathjak107]

at a meeting last night on our company 401k the statement was made that you can roll personal ira's not just rollover ira's into the company 401k.

when i questioned that i thought only rollover ira's could be rolled back i got an answer that the pension act of 2006 changed that. i looked but i cant seem to find anything showing this is correct

 

[saluki9]

Yeah, you can roll any IRA into a company 401(k). Why you would want to do that I'm not sure.

 

[FinanceDude]

This may help:

WebCPA - Rolling over to a qualified plan from a traditional IRA

Looks like it depends on the plan's SPD...........

 

[Art G]

Yeah, you can roll any IRA into a company 401(k). Why you would want to do that I'm not sure.

Well, say perhaps you want all your money in American Funds mutual funds and your company has over $1MM in their plan, you can now buy the fund at NAV.
Of course, you need to be aware of any limitations if you want to roll it back out without having to quit your job.

 

[saluki9]

Well, say perhaps you want all your money in American Funds mutual funds and your company has over $1MM in their plan, you can now buy the fund at NAV.

Again, let me reiterate, why would you want to do this?

 

[FinanceDude]

Again, let me reiterate, why would you want to do this?

Three reasons:

1)To give up control of your money

2)To limit your investment choices

3)To let the company change to an annuity company that has an ER of 2.5% because the CFO's advisor buys him a lot of free golf.......

 

[Art G]

Again, let me reiterate, why would you want to do this?

If your company offers a loan against your 401k, this may offer an advantage. With the IRA you have 60 days to put it back.

 

[JohnDoe]

To avoid any loads? My 401k doesn't charge any loads even though some funds have them.

So you could tap it at age 55 with out 72T.

 

[tuixiu]

We had the 401k meeting at our work and as usual the lady is up there telling everyone how much more convenient it is to roll their existing IRAs and old 401ks into it so your investments are in one place.

They not only have a very limited fund selection, their cheapest fund is an S&P 500 Index fund with an expense ratio over .6%, plus their administrative fee is 1% of your total balance. They also suckered lots of people into the "we manage your money for you" for another percentage of balance I forget how much.

Craziness.

 

[Sarah in SC]

I think one reason you might want to is the idea of taking withdrawals at 55 after separation of service, which isn't available in IRAs. And there is also that pesky question if you are sued, that ERISA plans are protected, whereas it isn't so clear with IRAs that they can't be taken. So goes the conventional reasoning.
I've seen folks roll in IRAs to qualified plans. I wouldn't do it, but heck, I don't think anyone is going to sue me, and I plan to separate from service before 55.

 

[FinanceDude]

I think one reason you might want to is the idea of taking withdrawals at 55 after separation of service, which isn't available in IRAs. And there is also that pesky question if you are sued, that ERISA plans are protected, whereas it isn't so clear with IRAs that they can't be taken. So goes the conventional reasoning.
I've seen folks roll in IRAs to qualified plans. I wouldn't do it, but heck, I don't think anyone is going to sue me, and I plan to separate from service before 55.

CFPs don't retire.......

 

[FinanceDude]

To avoid any loads? My 401k doesn't charge any loads even though some funds have them.

So you could tap it at age 55 with out 72T.

Does Vanguard charge loads I'm not aware of??

 

[JohnDoe]

What's Vanguard have to do with anything?

 

[tuixiu]

I assume he's pointing out that with the choices available in an IRA it's easy to have a portfolio that suits your allocation needs from companies like Vanguard.

 

[mathjak107]

i wouldn never do it but i think it has certain advantages for some. 401k's can be borrowed from, in most states 401k's are exempt from creditors. ira's may not be

 

[tuixiu]

I just checked the laws for Arizona, and here only contributions made in the last 120 days can be subject to creditor's claims.

But I'm not sure where Arizona applies... is it just where my primary residence is? Like if I'm on vacation in Vegas where an incident occurs that leads to a lawsuit am I subject to Nevada law?

Furthermore if the wife and I engage in operation rambling-man (tm) must I be aware of the specific laws everywhere I go? What about international like if we move to Chiang Mai for a year?

Argghh. Umbrella policy.

 

[Art G]

A big disadvantage not mentioned is that in a 401k, the money tends to be much less available. Some plans only allow withdrawals quarterly for instance.

 

[bentley]

If I understand 401k rules correctly, they allow periodic distributions after the age of 55 IF, you have separated from that company after age 55 without payment of the 10% penalty. Regular taxes are still due however.

This is what I understand from the irs rules on 401k's. The specific company plan may be more restrictive. READ you're company's plan about taking distributions between ages 55 and 59.5.

my two pennies

b

 

[Trapshooter]

Three reasons:

1)To give up control of your money

2)To limit your investment choices

3)To let the company change to an annuity company that has an ER of 2.5% because the CFO's advisor buys him a lot of free golf.......

So true.