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