Getting Personal
Early withdrawal from 401(k)
Question: Is it possible to move the majority of my balance in my company's 401k to a self-directed IRA without penalty (or quitting my job)? I'm not happy with the investment alternatives available in my company's 401k plan. David, Lewis Center, OH
Answer: In most cases the answer is no. The general rule is that employers aren't supposed to let you take money out of the 401(k) and roll it over into an IRA. You can only do that when you leave the company--voluntarily or involuntarily.
However, there is one important wrinkle (hey, legislators can't make saving for retirement simple, can they?). By law, companies can offer their employees 59 ½ or older the option of rolling over their contributions into an IRA. It's called an "in-service" distribution. In other words, you're still working for the company, you're 59 ½ or older, and you can roll the money over into an IRA. It's legal, but it's up to management whether they offer the option. A majority of large companies seem to allow it.
To learn more about the twists-and-turns in the in-service distribution world, check out this detailed article in Forbes: The Great 401(k) Escape.
Search
Looking for guidance on your personal finances? I'm taking your questions and answering one here each day. Just click on the "Ask a question" link to tell me what's on your mind.
Chris Farrell Marketplace Money personal finance guru
Categories
- Banking
- Books
- Budgeting
- Charitable giving
- Credit cards
- Credit counseling
- Credit report, credit score
- Currency
- Debt
- Dollar exchange rate
- Economy
- Estate planning
- Financial planner
- Housing
- Insurance
- Investing
- Kids and money
- Mutual funds
- Other
- Paying for college
- Retirement
- Retirement savings
- 401k
- Bonds
- IRAs
- Money markets
- Mutual funds
- Savings
- Scams
- Social Security
- Spending
- Taxes
- Vacation
- Work
- cars
- graduate school
Hot Topic
Latest Posts
Archives
| S | M | T | W | T | F | S |
|---|---|---|---|---|---|---|
| 1 | 2 | 3 | 4 | 5 | ||
| 6 | 7 | 8 | 9 | 10 | 11 | 12 |
| 13 | 14 | 15 | 16 | 17 | 18 | 19 |
| 20 | 21 | 22 | 23 | 24 | 25 | 26 |
| 27 | 28 | 29 | 30 |
sponsor
Latest Comments
- How much of a down payment? (2)
- jj wrote: I think you're trade-offs are pretty much spot-on. When we went to buy our house, we had a very sim... [read]
- bruce mauser wrote: The best part of a down payment of 20% + is you do not have to use the banks escrow for taxes and in... [read]
- What to do with an annuity (1)
- Paul W Manning Sr wrote: Heads Up For The retirees Info... [read]
- 401(k) money (1)
- Jeff wrote: If your assets in the 401k are stock mutual funds, should the fact that they are down now affect you... [read]
- Buying gold (4)
- FooMoney wrote: There are options to buy physical gold without a storage fee, you can find out more at <a href="http... [read]
- Doug Digger Eberhardt wrote: Jeff, Depends on the gold you have in storage. Have you looked into insurance polices and how much... [read]
- Saving for retirement (2)
- Paul Lunsway wrote: Horrible, dipping into someone else's retirement fund, really. "I will be shortly be receiving MY p... [read]
- LeAnn wrote: It's not low moral standing when as a spouse you've given up your career to support and raise the fa... [read]
sponsor
