rollover contributions by former employees

[Guest Marshall Franklin]

Assuming the plan permits it, is there any reason why a 401(k) plan could not accept a rollover contribution (an eligible rollover distribution from the plan of a subsequent employer) by a former employee who is still a participant?

[Jon Chambers]

I don't see why not, but why would the plan want to accept rollovers from former participants? To build assets for economies of investment scale?

[MWeddell]

Private letter ruling 8816050 interpreted "employee" in Code Section 402's rollover rules to include an retired employee. It's not a very strong or recent piece of authority, but supports a conclusion that you legally could do this for former employees.