401K In-Service Withdrawal Into An IRA Rollover?

Question:

In 2006, I took a pre-approved In-Service withdrawal from my 401K in the amount of $28,000 and it was directly deposited into a Rollover IRA within 2 days. This allowed me greater flexibility with investment choices. What, if any, are the tax consequences? (Yes, I am asking after the fact!) Thank you in advance!

Answer:
As long as you did not get your hands on the disbursement in any way, there are no tax consequences. It sounds like the rollover was done properly so you can sleep easily.

totally depends on what the reason for your distribution was. Sounds like your plan allows for in-service withdrawals after age 59 1/2. If that's the case then you're good to go so long as the entire balance was rolled over.

However, if you took a hardship to get at the funds to get more flexibility...that wasn't eligible to be rolled over. Then you're looking at an ineligible rollover, 10% extra tax and taxable event. Not likely the latter but some people do some crazy things.

401K In-Service Withdrawal Into An IRA Rollover?

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