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yes that is good to know. I have had to look and learn all of that too. I have been looking at options when the wife retires. We are going to roll it out of her company plan and into her own IRA. It will be a few months from now. She retires in September. The nice thing is that although we will pay a price in the roll over we have many years before we need touch it. It also will just reach 100k and maybe a bit more so we will not be affected by RMD for her either. I am pretty sure that I read that RMD's only last until the account reaches a balance of 100k.
One thing, if you are going to roll over, see if you can have it directly sent to where you plan to roll over otherwise taxes will be taken out in advance even if you plan to roll it over within the allowed 60 days.
I think this is correct, but just want to confirm. After I turn 59 1/2, I can withdraw any amount I want on a monthly basis (assuming my plan allows), without penalty and without the IRS setting the amount (i.e., RMDs) , yes? So I can set my own budget and not have the monthly withdrawal calculated based on the longevity charts the IRS uses. Am I correct? Thanks!
Almost. The age that you can withdraw from a 401k is 55 (not 59.5), assuming you ceased employment with that company after age 55. In other words:
Quit at age 55 = can withdraw with no penalty
Quit at age 56 = can withdraw with no penalty (etc. 57, 58, 59)
Quit at age 54 = must wait until 59.5
Roll over to IRA = must wait until 59.5
I can't imagine too many instances where people need/should those earlier additional 4.5 years but it's something to consider if you're thinking of quitting at age 54, maybe tough it out until 55 so more flexibility on withdrawals if you need it. Providers also have varying levels of service related to 401k withdrawals.
Quote:
Originally Posted by NorthofHere
One thing, if you are going to roll over, see if you can have it directly sent to where you plan to roll over otherwise taxes will be taken out in advance even if you plan to roll it over within the allowed 60 days.
Yep. Direct trustee-to-trustee is the way to go, especially now with the 365 day aggregate rule for rollovers.
What "price" are you paying ? I've done 4 rollovers, and never "paid a price".
Maybe loss of co. match in a 401K, but that's not a loss due to rollover.
Also, as others have said, there is no 100K "safe-harbor" for RMDs. In Pub 590B at https://www.irs.gov/pub/irs-pdf/p590b.pdf the IRS says:
"You cannot keep funds in a traditional IRA (including SEP and SIMPLE IRAs) indefinitely. Eventually they must be distributed."
Perhaps the OP is thinking of converting to a Roth for his wife.
What "price" are you paying ? I've done 4 rollovers, and never "paid a price".
Maybe loss of co. match in a 401K, but that's not a loss due to rollover.
Also, as others have said, there is no 100K "safe-harbor" for RMDs. In Pub 590B at https://www.irs.gov/pub/irs-pdf/p590b.pdf the IRS says:
"You cannot keep funds in a traditional IRA (including SEP and SIMPLE IRAs) indefinitely. Eventually they must be distributed."
money being rolled out of one account to another account does not go dollar for dollar. There is a small fee at the receiving account for transactions. There is also a small fee from the losing account as well. Transactions do not happen out of the goodness of their hearts. Each company takes a percentage for their time and effort.
Quote:
Originally Posted by NorthofHere
One thing, if you are going to roll over, see if you can have it directly sent to where you plan to roll over otherwise taxes will be taken out in advance even if you plan to roll it over within the allowed 60 days.
that is the only way to do a roll over to ensure you do not get wacked by a delay.
Quote:
Originally Posted by dcfas
Perhaps the OP is thinking of converting to a Roth for his wife.
I wasn't but I might in the future. It depends on my income at some point. It will wack us hard the year we do but... it could be very fruitful. Because her traditional 401k will not make 100k for a while after she retires we will have some wiggle room in the form of time.
i have never paid a penny extra for rollovers from any 401k account i ever had . not say some plans may not have a close out fee but i have never seen one .
i have never paid a penny extra for rollovers from any 401k account i ever had . not say some plans may not have a close out fee but i have never seen one .
Are you absolutely sure? Can you without any doubt say that the account managers of any of those not take fees? Can you say without absolute surety that you got every penny?
yep . no fees . every dollar transfered every time . i did 4 roll overs in my life from 4 different plans . all money came from different company's but all went to fidelity .
Actually you can do it at 54. The rule is the calendar year that you turn 55:
Leaving Your Job On or After Age 55
The age 59½ distribution rule says any 401k participant may begin to withdraw money from his or her plan after reaching the age of 59½ without having to pay a 10 percent early withdrawal penalty.
There is an exception to that rule, however, which allows an employee who retires, quits or is fired at age 55 to withdraw without penalty from their 401k (the "rule of 55"). There are three key points early retirees need to know.
First, this exception applies if you leave your job at any time during the calendar year in which you turn 55, or later, according to IRS Publication 575.
Second, if you still have money in the plan of a former employer and assuming you weren't at least age 55 when you left that employer, you'll have to wait until age 59½ to start taking withdrawals without penalty. Better yet, get any old 401k's rolled into your current 401k before you retire from your current job so that you will have access to these funds penalty free.
Third, this exception only applies to funds withdrawn from a 401k. IRAs operate until different rules, so if you retire and roll money into an IRA from your 401k before age 59½, you will lose this exception on those dollars.
when you leave a company in the year you will be 55 there are a few hitches .
first off in order to take money out in periodic payments ( not one lump sum ) from the 401k the plan has to allow for periodic payments . most do not so your only recourse is a lump sum .
most plans allow only 1 lump sum withdrawal so basically the age 55 thing is not valid without taking a lump sum and putting it in a non retirement account and paying all the taxes on a lump sum . . .
if you do roll it over to an ira you loose the ability to hit it penalty free before 59-1/2 . once it is in an ira you would need to do a 72t election to escape the penalty .
if you roll it over the lump sum option is an option you have at any age anytime you leave a company unless they have some stipulation about keeping your money until at least age 54-55 . so pretty much whether age 54-55 or not is irrelevant at that point since you have no additional benefit at 54-55 that you didn't have at any age .
every time i left a company i rolled my 401k over to my ira pre 54-55 .
Last edited by mathjak107; 02-09-2017 at 05:31 AM..
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