Limited 401K options ... IRA?

It's possible that I misunderstood what she was saying.

The response to the call was specifically given to prevent the tax and penalty, hence mention of the 60-day period.

Possibly my fault. Her advice on strategy and such is sometimes controversial, but she does generally get technical things right.

Brian

There were changes under the 2001 EGTRRA, and further changes under the 2006 Pension Protection Act - both of which increased the opportunities for in-service distributions.

In particular, the 2006 law allows them for folks who are still working but over 62.

This sort of thing is why I qualified my remarks earlier by saying *in general* one cannot roll 401k money over unless they leave that job. For most folks, in most cases, that's the situation.

Indeed, it's probably the most likely way that a trustee-to-trustee transfer will happen. Usually one goes and opens a new account at the brokerage or wherever one is planning on transfering *to*. They will give you an account number and tell you how the check should be made out (ie. the new trustee's name). You put all that information on the forms you send in to your 401k provider (and may need to get it notarized, too) and send it in. The 401k will probably send a check to you at your address - but the name on the check should be the new custodians, not yours! If the check is made out to you, contact the 401k provider IMMEDIATELY! and get it straightened out. Do *not* cash it or deposit it.

And, as I said, you may have no choice in the matter. Do look carefully at that check if they send it to you.

Is this still true? My 401(k) has a brokerage window and I know that several companies in my industry also have this. But I've discovered here that my industry is generally unusual in how it handles 401(k)s, so possibly it is unusual here as well...

-Will

wrote [on in-service non-hardship 401(k) rollovers to Trad IRAs)

Agreed. The strings attached are frightening. Notably, it appears to apply only to after-tax 401(k) contributions. Contributing after-taxes to 401(k)s surely is a rare animal.

Part of the Sept 2007 paper at

at first seems to suggest a fair amount of companies do permit before 59.5 rollovers. Then one reads the fine print of the table on page 27 and sees that the non-hardship rollovers are, as I indicate above, permitted only with after-tax contributions. I wonder how many of the google hits for "in-service, non-hardship rollover" and similar are a result of advertisements for financial advising companies like the following:

This company is encouraging people to withdraw from 401(k)s (and invest under its supervision and at its profit!), claiming the greater number of options people have by doing so, plus the tax-deferred growth, can justify it. Yikes.

"Thumper" wrote

Without more info, I think it's pretty likely this was done with after-tax contributions.

An individual who takes a distribution will have 20% withheld to cover the taxes. That's the amount that would have to be covered, because the woman couldn't recover the withheld taxes until she filed 2007's return.

So I didn't say it quite right, it should have been, "If she could cover the tax withholding . . ."

Brian

I was going from reading here the last several years, recalling no posts reporting a stock brokerage option like that in an IRA brokerage account. Plus general reports of how retirement accounts overwhelmingly are mutual funds focused. The following 2006 article says (7th paragraph from the bottom) that only 3% of 401(k) participants are offered the option to trade stocks (using a brokerage account) other than company stock.

05 I think one has to consider the history of 401(k)s. Namely, they were legislated so as to help companies reduce the cost of "pensions," reverting, as I know you know, from defined benefit plans (whose costs were somewhat unknown to the company) to defined contribution plans (whose costs were much better known). Much talk on the net centers around limiting choices (of any kind) to enrollees so as to keep plan costs down (including keeping employees from losing their shirts through, say, lack of diversification and/or day trading). I imagine the larger the company, the more individual stock trading choices it offers.

I may see him Thursday. I'll try to remember to ask. Thumper

Could be but I thought all of his contributions were pre-tax. Thumper