Can I do a rollover/direct distribution of 401k into a traditional IRA while still employed?
Question:
Answer:
The IRS allows you to move your retirement money from a 401k to a traditional IRA at anytime. Unfortunately, 401k rules are set by your employer within IRS guidelines. Most 401k's have a mandatory tax withholding of 20% if you leave them early - even if it's to move into another plan.
Basically what you need to do is ask your plan administrator if you can do a directed rollover with any penalty. Whatever their answer is will determine your next steps.
Well, as I understand, you have entered in a legal agreement with your employer and the handlers of the 401K to maintain the account as such.
A more important question is why move it? I mean, I understand that you are less than satisfied with their choices, but it looks like they are giving a match to each contribution you make. Will a change to a traditional IRA cover that match? If your employers are matching more than 6% of the total you put in (usually, I see about 50% to 100% matching, much higher than any rate I see on any traditional IRA) then you are still making out more than you would get. Pencil it out and do the numbers, you may be in a better position than you thought.
My advice? Find the hardsip. Kids going to college? Roof falling in? Famiy members about to pass? I would ask specifically what is meant by an "emergency" and I would find one in writing. But be sure your newfound IRA interest rate down't drop after the first year. Bank are notorious for rate changing. Make sure in writing that the rate won't drop at the bank. Plus, the company you are working for may have a better things going (a dollar match , for example) and you may have to read all of the fine print. Also, are you at an at will employer? Many states have that now. They are looking for reason to fire people at the behest of the boardmembers. Who are you working for? Nazi's? Like I said, create the hardship. Brother in jail? Divorce is a way to have an emergency. My firmer spouse worked for Atlantic Richfierl and they didn't waste time liquidating that account. Depending on the amount, hire a lawyer named "Jaws" and let him find the loophole. There alwyas is one. Good luck. PS. If you move funds intracompany, why shoud they care if it is under the same umbrella?
you can cut the percentage you put in, but bottom line you cannot roll over your 401k unless you have changed jobs. my advice, only contribute up to what your company matches, if you REALLY dont like the investments, go lower. then contact a financial advisor and put the extra cash somewhere else
There is only one answer
YES you can
401k is the code section in the IRS Regs that refers to IRAs. they are one and the same. IRS rules are very strict on 401ks and are managed very conservatively. Leave it where it is.
More Questions & Answers...