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Roll over of Pension

I used to work for IBM and I want to rollover my pension to my 401k. Fortunately, I will be switching jobs again, but I won't be able to open the 401k until the month after. So what I want to do is either open an IRA or a ROTH IRA and stash the pension money in there until I can roll it over to my new 401k.

You probably would ask why not wait until you get the new 401k. Well we want to buy a house and I want to be able to tap that pension money for the down payment. What is the best way to handle this?

Reply to
Arinté
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This type of IRA is called a "conduit IRA." It cannot contain any other IRA funds. If your IBM 401(k) includes both Roth and traditional balances, you roll each part into the corresponding IRA type.

Once the funds are in the IRA, you can then withdraw the funds and use them for 60 days before you put the funds into a different conduit IRA (it can't go into the same IRA). Note that you need to ask that no federal tax be withheld; otherwise you'll need to replace those funds from other sources. Finally, you roll the conduit IRA into the new

401(k). Note: if you miss the 60-day date, even if through no fault of your own, the full amount becomes taxable, and subject to the 10% penalty, except for the homebuyer rule. It's not a good source for the down payment, because of the amount of tax you end up paying.
Reply to
Tom Healy CPA

The restrictions on conduit IRAs were repealed several years ago. See Pub 590.

Phil Marti VITA/TCE Volunteer

Reply to
Phil Marti

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