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In-Service distribution: what forms to file, etc.


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I own and am the only employee (W2 pay) of a C Corp which administers a solo 401k of which I particape and which allows in-service withdrawals.

I will be turning 59 1/2 soon and would like to know my options and the forms I will need to file particular to the option(s) I act on.

I'm thinking of continuing to work for my company, but possible take a distribution from the 401k.

Can I move part of my 401k to my Traditional IRA while still working for the company? If so, what forms would I need to file and what would go on the W2 and where?

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Start by talking with the company that helped you set up the 401(k) plan. They should have a package of forms for your use. You will want to make sure your plan allows this also. Just because it is legal it has to be allowed in your plan document. Once again talking to the people that helped you set up the plan and the documents would be a good place to start.

I obviously don't know why you want to do this but I would get some advice before doing this. There might be issues you are not thinking of that might be important. For example, as a rule money in a 401(k) plan is more secure from your creditors then money in an IRA in case of bankruptcy.

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Check your document to see if it allows for in-service.

If it does, sure you could take a taxable distribution or roll over to IRA. Though as the sole participant why would need an IRA?

If it doesn't you could amend your document to allow it.

You should talk to your record keeper or custodian of assets as to what forms they require.

Distribution would be reported on a 1099-R not a W2.

You are probably the ERISA Plan Administartor and you are required to prepare the 1099-R though that is something your custodian of assets or third party administartor could prepare on your behalf. You should as them about the scope of their services.

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