I have an existing traditional IRA. I am employed and have a 401K with my current employer. I will be 55 this next year and plan to take distribution of the cash in the account per IRA rules concerning distribution of 401k funds in the year you turn 55 or later.

That year is fast approaching / less than a year away and I would like to move some additional funds to the 401k as a direct roll in from my IRA. My current plan allows this transfer in. The reason I would be transferring the funds into my 401k is to allow me to have enough balance in the account to tide me over until 59.5 along with other taxable savings I have in reserve. I would not be working that year so my tax bracket should be very low. I understand this distribution would be subject to normal income tax.

Do you see any problem with this plan?

Yes, you can't do it. Rollover's only work in one direction FROM 401K to IRA. The ony thing you can rollover INTO a 401K is funds from another 401K from a former employer.

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Originally Posted by ScottGem

Yes, you can't do it. Rollover's only work in one direction FROM 401K to IRA. The ony thing you can rollover INTO a 401K is funds from another 401K from a former employer.

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Thanks for the input, but just had a long conversation with Fidelity and the IRS and you can indeed do this type of transfer as long as your 401k plan allows for rollins from other retirement plans.

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Originally Posted by coolit55

I have an existing traditional IRA. I am employed and have a 401K with my current employer. I will be 55 this next year and plan to take distribution of the cash in the account per IRA rules concerning distribution of 401k funds in the year you turn 55 or later.

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What IRA rules are you referring to? You will pay early withdrawl penalties on any withdrawal from an IRA or 401(k) prior to age 59-1/2 unless you meet certain hardship rules, start a series of equal withdrawals (known as 72(t) withdrawals), or unless you are withdrawing from a 401(K) and are separated from service at age 55 or later.

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Originally Posted by coolit55

Thanks for the input, but just had a long conversation with Fidelity and the IRS and you can indeed do this type of transfer as long as your 401k plan allows for rollins from other retirement plans.

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Did they give you a code section that supports this? I've never heard of a plan allowing this.