Anyone ever do an In-Service Rollover?

[madatrub]

Still have some years left before retirement, but I've grown to hate the options offered by my current employers 401k. Anyone ever execute an In-service roll over? Im sure it varies by employer, but what are the constraints?

If allowable, does the rollover into existing tIRA/ROTH count towards yearly limitations or can you bulk transfer? Secondly, could you theoretically backdoor into a Roth and does that also come with restrictions?

 

[donheff]

No idea whether most allow it now, DW did a $1M+ in service rollover about 30 years ago when her law firm offered the option on a plan they were discontinuing. She moved the entire amount to a new IRA setup with our then FA's firm. It would have been a good idea if we were transferring to index funds at Vanguard or Schwab. We figured that out a few years later and moved that IRA from the FA to Vanguard. DW's law firm adopted a better 401k with low fees and good investment option later so she stayed with their 401K for the remainder of her career. I don't think they offered further in service roll over options.

 

[target2019]

I think the answer is that your 401(k) sets the rules as to whether in-service roll-over is allowed. Mine allowed roll-over in, but not out. I think most plans don't allow "out." You have to treminate before it's alllowed.

 

[Mark1]

I did backdoor Roth rollovers while w*rking at Mega-corp, which our 401K program allowed. The only requirement that I remember was that the post tax contributions went into a rollover Roth IRA and all of the gains associated with these post tax contributions had to be rolled into a taxable IRA during the same transaction.

 

[MRG]

I had two piles of money while working, one was profit sharing that I contributed 0 to the other a 401k. About the time as the 08 financial crisis they allowed us to move our money elsewhere. I did that with the 401k money. It involved a phone call and a little paperwork.

 

[athena53]

I think the answer is that your 401(k) sets the rules as to whether in-service roll-over is allowed. Mine allowed roll-over in, but not out. I think most plans don't allow "out." You have to terminate before it's alllowed.

I agree- a bit of ancient history but I rolled over a large 401(k) from a previous employer into a new employer's plan in 1998. I should have done my research- it was awful. I asked about getting it out. Nope- not unless I claimed hardship (did not apply in my case) or quit.

When I DID quit, my 401(k) was outta there almost as fast as I was.

 

[Montecfo]

I did an in-service withdrawal of my then entire regular 401k balance a few months before FIRE. I just rolled it into my existing traditional rollover IRA.

I did this because I was trustee of the plan and concerned there might be delays getting my rollover post my departure.

It operates just like any other rollover.

It all depends on your plan document.

 

[bigcmagor]

I'm doing this now. Our plan allows in-service rollovers after age 59.5 but for contributed funds only. The profit sharing contributions and matching funds must remain in the plan until termination.

 

[mwilson]

In-service rollover availability varies plan to plan.

One thing to consider is Rule of 55 (penalty-free withdrawal of funds after terminating at age 55+) applies to 401(k) but not IRAs, where you wait until 59.5.

 

[madatrub]

Thanks for the responses. Contacted my plan, as I could have guessed, I'm only permitted to roll over after tax dollars. Nothing pre-tax. Looks like I'll just have to retire and quit sooner than I wanted.

 

[Alex The Great]

I always do in-service rollover, when using Mega Backdoor Roth. Typically, these are after tax contributions. The principal comes into Roth and whatever gain is to tIRA. As regarding pre-tax contributions, I did in-service rollover of some tIRA funds converted from previous employers into current 401K in order to fund retirement using 55 rule.