[net.taxes] Rollover of 401-K plans.

ijk@hropus.UUCP (Ihor J. Kinal) (02/26/86)

In the near future, I'm leaving one company for another that
does not currently have (but will in the near future) a 401K
plan.  I assume that I'll receive a check for the value of
my investments.  My question is, can one rollover that money by
investing in my new company plan?  Is there a 60 day limit,
as with IRA rollovers??  If I can't get the money into my
new company 401K, can I invest it into an expanded IRA (exceeding
the $2000 limit?).  If not, what about the 10 year forward
averaging rule (does it apply)?

Or, once I can participate in the new 401 plan, I could
just increase my allotments to be a sufficiently higher amount
to cover the amount I receive from the old plan - is there
any penalty for not reinvesting (like there would for an IRA??).

Any advice would be greatly appreciated.
Ihor Kinal
ihnp4!houxm!hropus!ijk

tpl@hou2b.UUCP (T.LEE) (02/27/86)

As I recall,
	1). termination of employment is "one" of the ways 401K money
can get back to you. (no hardship stuff :-) )
	2). you can use it without IRA-like 10% penalty, but you have
to pay tax on them (your contribution and accrued gain/interest) since
you didn't pay any.  10-year forward averaging applies.  Never did this
before myself.  One of those free IRS publications should have this info.
	3). This is a good chance to roll it over to an IRA-like
investment if you don't need the money or don't like to pay tax.  There
is no limit on how much you can roll over.
	4). Most 401K plans offered do have a paragraph or two indicating
whether they will accept roll-overs from other 401K plans.  For example,
Bell Core's plan does.  But, my wife was not eligible when she joined BCR
from another company which she has a couple of thousand dollars on 401K.
She didn't bother asking whether she can rollover before she (after a
year) becomes eligible for the BCR's plan.  A small probability there.
This is also a funny kind of constraints.

	Anyway, we like the freedom to invest old 401K in a more general framework.
It is pain to be limited in a combinatorial way, 1,2,3,4 funds, pick one, two, or
three and invest equally.  The equity funds are not rated yearly.  Who
knows how they manage that and what incentives they have to do a good job?
Besides, there is a directed graph showing how to move from
one node to the other.  Too much hassle...
	
Her old 401K is in Fidelity's High Income Fund earning dividend slowly :-).
	T. Paul Lee
	hou2b!tpl
	ATT BL