what happens to a 401K when you leave a job?

[mathjak107]

Originally Posted by jghorton

As Mathjak pointed out, you can pretty much roll-over your 401K wherever you like ...as long as it is into another deferred tax fund. If you take the money out of the 401K or wish to roll it into a Roth, you will pay regular income taxes, plus a 10-percent penalty (if you are under 59-1/2).

An interesting fact that many are not aware of: You can also roll your 401K funds out of the Company sponsored 401K and into another tax-deferred fund of your choice ... WHILE YOU ARE STILL EMPLOYED THERE!

there is no penalty converting to a roth from a 401k.

prior to 2008 you could not even do that. you had to bring it in to a regular ira first.




How to Rollover Your 401k into a Roth IRA *READ THIS FIRST*

[mathjak107]

Originally Posted by jghorton

As Mathjak pointed out, you can pretty much roll-over your 401K wherever you like ...as long as it is into another deferred tax fund. If you take the money out of the 401K or wish to roll it into a Roth, you will pay regular income taxes, plus a 10-percent penalty (if you are under 59-1/2).

An interesting fact that many are not aware of: You can also roll your 401K funds out of the Company sponsored 401K and into another tax-deferred fund of your choice ... WHILE YOU ARE STILL EMPLOYED THERE!

while your still employed is called an in service distribution and the rules are very complex if under 59-/2.

under 59-1/2 the in service distributions have very tight rules around them and if the plan does not allow it your dead in the water anyway.
for pre-59 and a half year old folks, the law permits them to get in-service distributions of money rolled over from previous 401(k)s; of employer (but not employee) pretax contributions; of employee after-tax contributions; and of account earnings.

basically no ,you can NOT get your own contributions out from what i know under 59-1/2 . but i have been wrong before so lets see what you find.

[bUU]

Originally Posted by mathjak107

that amount is a plan rule and not a general rule.

I thought so as well, and mentioned that in a discussion thread a couple of weeks ago, and someone corrected me: It's part of ERISA itself. The number has increased over the years, but it is evidently codified in the law.

Originally Posted by Section 411(a)(11) of the Internal Revenue Code of 1986

If the present value of any nonforfeitable
accrued benefit exceeds $5,000, a plan meets
the requirements of this paragraph only if
such plan provides that such benefit may not
be immediately distributed without the consent
of the participant.

There's a whole bunch of arcane exclusions and provisions, but the crux of it is that they have to let you leave the money in their plan if you accrued $5,000 there.

[mathjak107]

actually i was referring to under 5k

[bUU]

Oh! Yes... under $5000 it is up to the plan. Definitely. There is no requirement to kick anyone out of a plan - just a requirement not to kick people out of the plan.

Thanks for the clarification.