In-Service Transfers

[Guest psgross]

We have a client who indicates that there is a "new" regulation that allows in-service transfers (regardless of age) of one-half of your 401K money to a personal IRA account one time each year.......has anyone heard of this rule and if so where I can find the reg?

[QDROphile]

When are people going to learn to ask rumor mongers to provide the information to support their propositions? How would you like to go on a snipe hunt?

[mbozek]

Why not try IRS.gov and search under retirement plans?

[Kirk Maldonado]

A more apt website would be one that debunks urban myths, particularly those promulgated by devious investment professionals (I'm using that term very loosely).

[Guest dbvail]

OK, I'll try. Aside from hardship (college, medical or mortgage) you need to terminate (separate from service), retire (same thing, different reason), or die (same thing, alternate reason) to take a distribution. The Plan Administrator (PA)will guide you on whether you cn take some or all of the money and give it to this advisor. The PA will be governed by the plan document, which, in turn, will be in compliance with the laws and regs.

Good luck, and I hope you will have a successful retirement.

[Guest Pensions in Paradise]

Just to expand on dbvail's post, remember that hardship withdrawals cannot be rolled over to an IRA. So other than separating from service, the only way a participant can roll 401k money into an IRA is after attaining age 59-1/2 (assuming of course the plan allows for in-service withdrawals).

[Guest psgross]

I understand all of the hardship, in-service rules....I've been in the retirement plan business for 24 years! That's not the question.....I was simply asking if anyone had heard of any "new" regs that allowed for the in-service withdrawal the client posed? I try to keep up-to-date but sometimes things do slip by that we're not aware of! I didn't need the rude comments!!!! We asked the client for something in writing that substantiated his claim!!

[FundeK]

I personally haven't heard of this "new" regulation, and I try to stay on top of things as well.

I think Kirk response best answered your question. Probably just an "urban legend" in the financial community!

We asked the client for something in writing that substantiated his claim!!

Definitely the best thing to do!

[mbozek]

The reg that you are referring to could only be issued if the Section 401k limitations on when distributions can be made prior to age 59 1/2 were amended to permit such transfers. Since IRC 401k has not been amended there is no reg.