Rollover Previous 403b & 401k into current 401k or IRA?

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Itster
Posts: 147
Joined: Mon Aug 06, 2012 9:50 pm

Rollover Previous 403b & 401k into current 401k or IRA?

Post by Itster » Mon Oct 30, 2017 7:51 pm

I had made the decision to consolidate and rollover a previous employer's 403b and another's 401k into my current 401k. However, today someone recommended that it would be better to roll them into an IRA instead, in case I needed the money for an emergency or tuition expenses. I was thinking that the 401k would be better because, if one leaves a place of employment at age 55 or older, you could receive a distribution on that money without penalty (not sure if this works for a layoff as it does if you leave employment willingly). So, is there really a better target for this rollover, or does it just "depend" on how you might need the money later?

krow36
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Location: WA

Re: Rollover Previous 403b & 401k into current 401k or IRA?

Post by krow36 » Mon Oct 30, 2017 8:16 pm

I think the ability to take a distribution from a 403b or a 401k without penalty starting at age 55 has a restriction that rules out your 403b from a previous employer. It's only allowed if the 403b or 401k is the one you have when you retire. So if you retired at 55 from your present job, you could take a distribution from your current 401k, but not from the old 403b.
https://irahelp.com/slottreport/age ... on-penalty

Itster
Posts: 147
Joined: Mon Aug 06, 2012 9:50 pm

Re: Rollover Previous 403b & 401k into current 401k or IRA?

Post by Itster » Mon Oct 30, 2017 8:33 pm

krow36 wrote:
Mon Oct 30, 2017 8:16 pm
I think the ability to take a distribution from a 403b or a 401k without penalty starting at age 55 has a restriction that rules out your 403b from a previous employer. It's only allowed if the 403b or 401k is the one you have when you retire. So if you retired at 55 from your present job, you could take a distribution from your current 401k, but not from the old 403b.
https://irahelp.com/slottreport/age ... on-penalty
Yes, that's true. But if I'm not mistaken, I can roll the 403b into the current 401k and then I could take a distribution on that amount. Is that not correct?

krow36
Posts: 1388
Joined: Fri Jan 30, 2015 6:05 pm
Location: WA

Re: Rollover Previous 403b & 401k into current 401k or IRA?

Post by krow36 » Mon Oct 30, 2017 9:12 pm

Itster wrote:
Mon Oct 30, 2017 8:33 pm
krow36 wrote:
Mon Oct 30, 2017 8:16 pm
I think the ability to take a distribution from a 403b or a 401k without penalty starting at age 55 has a restriction that rules out your 403b from a previous employer. It's only allowed if the 403b or 401k is the one you have when you retire. So if you retired at 55 from your present job, you could take a distribution from your current 401k, but not from the old 403b.
https://irahelp.com/slottreport/age ... on-penalty
Yes, that's true. But if I'm not mistaken, I can roll the 403b into the current 401k and then I could take a distribution on that amount. Is that not correct?
I don't know but I doubt it. I think it's probable that the 403b you roll into a 401k plan will be kept in a separate subaccount. I think this is a question for Spirit Rider or Alan S.

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Earl Lemongrab
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Re: Rollover Previous 403b & 401k into current 401k or IRA?

Post by Earl Lemongrab » Tue Oct 31, 2017 10:44 am

If it's rolled into a current plan, then it's almost certainly going to go into a separate account. As it wasn't from employee deferrals or Roth contributions, this rollover contribution would be eligible for distribution from the plan at ANY age. The plan does not have to allow that.

The big question on rolling into an IRA is whether the OP currently uses or likely in the future will use the backdoor Roth. A taxable rollover IRA will interfere.
This week's fortune cookie: "You will do well to expand your horizons." Ow. Passive-aggressive and vaguely ominous.

Itster
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Re: Rollover Previous 403b & 401k into current 401k or IRA?

Post by Itster » Wed Nov 01, 2017 5:22 pm

Thank you. I do not believe I'll ever be in the position to need a back door.

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Earl Lemongrab
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Re: Rollover Previous 403b & 401k into current 401k or IRA?

Post by Earl Lemongrab » Wed Nov 01, 2017 5:34 pm

Itster wrote:
Wed Nov 01, 2017 5:22 pm
Thank you. I do not believe I'll ever be in the position to need a back door.
In that case, I'd probably go to an IRA. You can even get a cash bonus for the rollover.
This week's fortune cookie: "You will do well to expand your horizons." Ow. Passive-aggressive and vaguely ominous.

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