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I will be age 59 in February and would like to change my 401k money to an ordinary IRA account asap, if this is possible w/out too much expense. My 401k is a Schwab account, and if they could switch it to one of their ira accounts that would be great. I have no idea even what I'm talking about and would like to know the rulesfor 59 1/2 and before on this issue.
Thank you.
I am no tax expert or financial planner though I am licensed to handle 401(k)'s and IRA's, just not currently active and have not been active in area for some time. It's my opionion you should encounter no tax consequences or penalties even though you are not quite 59 1/2 yet. Just make sure it's rolled over from the 401(k) provider directly to the IRA provider - in other words, never touch the money, check yourself. Have the 401(k) send the money directly to the IRA. Your best source of advice is a trained financial planner, tax attorney, CPA or, if you trust them, the 401(k) or IRA provider. I welcome any comments on my answer, I may be wrong but hope my two cents helps you somewhat.
You must have accidentally posed this question twice, here is the answer I gave on the 2nd exact question:
I am no tax expert or financial planner though I am licensed to handle 401(k)'s and IRA's, just not currently active and have not been active in area for some time. It's my opionion you should encounter no tax consequences or penalties even though you are not quite 59 1/2 yet. Just make sure it's rolled over from the 401(k) provider directly to the IRA provider - in other words, never touch the money, check yourself. Have the 401(k) send the money directly to the IRA. Your best source of advice is a trained financial planner, tax attorney, CPA or, if you trust them, the 401(k) or IRA provider. I welcome any comments on my answer, I may be wrong but hope my two cents helps you somewhat.
Richard is correct. The easiest way will be to decide who you want to open the IRA with first. They should do all of the paperwork for you and have the funds transferred to your new account.
What you don't say is whether you are still working with the company that is providing the 401K. If you are, then you should wait until you leave them to take a distribution. If you have left, then you can find someone to manage the IRA and roll it over into it.
P.S. In the future, please don't cross post. One post, in an appropriate forum, is enough.
..Quote:
Originally Posted by ScottGem
You can't withdraw until you are 59 1/2 without penalty. Even if you are rolling over. Rollovers are for qualified distributions not withdrawals. I'm not even sure if you can avoid taxes by rolling over a withdrawal.
Is there somewhere on the internet where I could read to find out if when I turn 59 1/2 can I have my 401k money rolled into an ira w/out paying any taxes on the money? I guess that is my question now. And if no one here knows this answer, where can I research it in layman's terms? Also is it a ridiculous question, and a long shot to be able to find a way to do this?
This link seems to make it clear.
401k compliance testing, 401k rules, 401k regulations and contributions, ERISA and 401(k) loans rules
This link seems to give you some hope:
Re: 401k Recapture
The gist of the two links is that you cannot rollover any withdrawal from the plan. However, if the plan permits inservice distributions (which the plan does not have to), you can take a distribution after 59 1/2 and then roll that over.
So you need to check with your plan administrator to see whether they permit inservice distribution and under what conditions.
I'm curious though, why the insistence of getting the funds out of your plan? Do you not like the investment options offered or what?
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