In recent conversations I have had with some clients, the question has come up as to whether you call rollover your 401(k) to a Traditional IRA while you are still employed at your current job. There seems to be some confusion about this and rumors of the eligibility rules around whether or not this can actually be done.
The answer is that you can actually do this type of withdrawal on a non-taxable basis under certain circumstances. Always consult a qualified CPA or financial advisor before doing this transaction. In a year where IRA money can be potentially converted to Roth IRA money, this may be a critical decision for your retirement.
If you are 59 ½ years of age or older, and still working, most 401(k) plans allow “age 59 1/2 rollovers”. If a particular plan does not, they most likely allow rollovers at age 65. If you are under 59 1/2, your employer may still allow for an in service distribution based upon the company policies and the 401(k) summary plan description. Since an IRA will offer you many more investment choices than most traditional 401(k) plans, this is an opportunity you should certainly look into. We track these at oXYGen Financial, and can likely tell you if your employer offers this program.
You CAN rollover (or otherwise withdraw) employer contributions, or employee (after-tax or rollover) contributions. And you can do so without any required taxes or penalties if the plan falls within the guidelines.
If you are tired of the limited number of options in your 401(k) plan, this jut may be the solution for you.
oXYGen Financial, Inc. co-CEO Ted Jenkin is one of the foremost knowledgeable professionals in giving financial advice to the X and Y Generation.
Ted Jenkin, CFP®, AAMS®, AWMA®, CRPC®, CMFC®, CRPS®
Co-CEO and Founder oXYGen Financial, Inc.
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