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SARSEP to 401k Rollover Reversal?


Guest Brendan McKee
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Guest Brendan McKee

Hello,

Our company maintained a SARSEP IRA until growth required us to replace this retirement plan with a 401k plan. A participant rolled over a portion of their SARSEP to the 401k in 2006. We are switching to a new 401k plan administrator in 2007. The participant would like to transfer the rollover amount from the 401k back to the SARSEP prior to the 401k administrator switch.

We've asked both 401k administrators (current and new) whether this is allowable and have received conflicting answers.

1) Old 401k administrator says that theoretically the SARSEP rollover amount is not subject to withdrawl limitiations and could be rolled back to the SARSEP.

2) New 401k administrator says that because the plan documents stipulate no in-service withdrawls until age 59-1/2 the SARSEP amount can't be rolled back to the SARSEP.

Can anyone provide additional details either way?

Thanks

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It depends on what the document says. It might generally not permit distributions before age 59 1/2, but there could be an exception for rollovers.

And if the document was restated as part of the takeover, then I think you need to review the old document too, because if withdrawal of rollovers was previously permitted, it can't be taken away...at least I think that's protected benefit.

Ed Snyder

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Guest Brendan McKee
It depends on what the document says. It might generally not permit distributions before age 59 1/2, but there could be an exception for rollovers.

And if the document was restated as part of the takeover, then I think you need to review the old document too, because if withdrawal of rollovers was previously permitted, it can't be taken away...at least I think that's protected benefit.

Thanks Bird. We did find it allowed under a separate "rollovers" section rather than under distributions.

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