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Navigating a Rollover of a Current Employer Plan into an IRA

Navigating a Rollover of a Current Employer Plan into an IRA

401k, 403b, TSP, 457

Having co-founded iTrustCapital, which helps clients take advantage of the incredible tax benefits of IRAs to invest in alternative assets like Cryptocurrency and Precious Metals, one of the most common questions I get asked is– Can I rollover my current employer plan into an IRA?

My answer is always MAYBE.    

Of course, any old employer plan from a PAST job can be rolled into an IRA with no taxable event or penalties.  

General rollover process from a PAST employer

  1. Open a new Traditional IRA
  2. Contact the plan administrator of the account you wish to rollover. You may be able to do this online. FYI – the plan administrator is not H/R from your past job. You can find their info on a recent statement or online.
  3. Request a rollover to your new Traditional IRA. Your plan administrator will likely have forms you will need to sign. Again, you may be able to do this all online.
  4. Typically a check is cut, and they usually will only send it to the address on file. Once you receive the check, you forward it to your new IRA custodian.
  5. The check must be made out properly. You should have instructions from your new IRA provider as to how it should read. It usually will look like this ‘Sunwest Trust FBO: John Doe’ Note: do not endorse the check as it is to be deposited by your new trust company, not you.  
  6. Once your new IRA custodian receives the check and the funds clear, you are ready to invest.  

The challenge is when you are still at the job where your plan resides. It is less likely you will be able to do a rollover until you leave the job, but there are exceptions. You may qualify for what is known as an In-Service Rollover. An In-Service Rollover means you can roll some or, in rare circumstances, all of your current accounts into an IRA even though you still are employed by the company.

General In-Service Rollover requirements

  1. You are over the age of 59 ½. 
  2. You are fully vested with the company. (Typically 6-8 yrs employed)

One more way

  1. If you rolled funds from a past employer plan into your current employer plan, you will likely be able to roll the same amount to an IRA at any time. The age and vesting requirements don’t apply in this case.

From my 10+ years of experience working with retirement accounts, the three points listed above hold true on almost every time. However, occasionally even I get surprised, and some can rollover funds from a current employer who does not meet the above criteria. So I always recommend my clients call their plan administrator and simply ask– Do I qualify for an In-Service Rollover? If they say yes, you are in business and can begin the rollover process listed above. And if not, you can always quit your job! Kidding, of course.  

Disclaimer: I am not a licensed financial or tax advisor — consult with a financial professional to determine what is best for you.

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