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Moving 401k funds to rollover IRA while still employed at the same company
Hi,
I was told that you can withdraw your retirement funds and then get them back in within 60 days and not have to pay any penalties. If this is correct, does this mean that I can withdraw my 401k funds and move them into a rollover IRA within 60 days without any penalties? Thanks in advance for your time, Sam |
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Sam:
Yes, that is true, but it is better to let the custodian send the money DIRECTLY to the IRA and NOT through you. Otherwise, they may withhold 20% for taxes which you would have to make up from other income to avoid any taxes, then wait until you file your tax return to get the withholding back. |
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Actually - 401(k) plans may vary from employer to employer, but I'm pretty sure that most (perhaps all?) do not allow you to roll money out to an IRA while you are still employed there. You can only roll the money to an IRA after you have left the employment of the company. I suggest you check with your administrator verify whether you are locked in as long as you are in the payroll.
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