Yes.
Why? It allows a plan to do something that wasn't previously allowed.
Probably most plans did, especially if they use boilerplate provided by the administrator (so the cost of changes is mostly divided among many plans, and the administrator wants to be able to take in more money).
Seth
Because it creates confusion. From what you say, one should maintain the "rollover account" and never mingle, until after retiring.
From Schwab's site:
------------------------ Can I combine my Rollover IRA assets with the assets in my other IRAs and still roll over my assets to an employer-sponsored retirement plan in the future? As of 2002, you can combine any assets held in a Traditional IRA, Rollover IRA or an employer-sponsored retirement plan like a 401(k),
403(b) or 457(b), including any after-tax employee contributions. But not every employer-sponsored plan will allow you to roll over combined assets. You should check with your new employer regarding their plan-specific rules. It is advised that you consult with a tax advisor for more details.-----------------------
This confirms your position. Disclosure - it's never about me being right, just seeking truth. I think I found it. The punchline is the new rule can confuse job changers into combining accounts, then finding the new employer will not accept the money. Seth - thanks for your patience in this dialog.
Joe
One thing that I haven't seen mentioned is the conversion to Roth. Moving the 401(k) to an IRA means that the balance in the IRA goes up. If you had a non-deductible IRA and you wanted to convert that to a Roth, moving the 401(k) to an IRA would make your tax liability higher.
Anoop
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