Premarital 401k

[qurice]

What is the name of your state? TX

My wife has a 401k from a previous job that she has not rolled over. If she rolls it over into her current 401k will it then be considered "co-mingled" and become a marital asset? Or will the rollover amount stay hers because they were aquired before the marriage?

Thanks

[LdiJ]

Originally Posted by qurice

What is the name of your state? TX

My wife has a 401k from a previous job that she has not rolled over. If she rolls it over into her current 401k will it then be considered "co-mingled" and become a marital asset? Or will the rollover amount stay hers because they were aquired before the marriage?

Thanks

The rollover amount will remain hers because it was aquired before the marriage. Only retirement funds that are accrued during the marriage are marital property. However she wouldn't be able to roll it into her current 401k. She could roll it into an IRA, but not her current 401k.

Now...if she were to cash it out, and you both paid the appropriate taxes, and then it was deposited into a joint account somewhere, it could then be considered to be co-mingled.

[ShyCat]

However she wouldn't be able to roll it into her current 401k. She could roll it into an IRA, but not her current 401k.

If her current 401(k) plan allows it, she most certainly can roll her previous 401(k) account into the new one. ERISA does not disallow such a rollover; it is either allowed or not allowed by the employer's 401(k) plan.

[LdiJ]

Originally Posted by ShyCat

If her current 401(k) plan allows it, she most certainly can roll her previous 401(k) account into the new one. ERISA does not disallow such a rollover; it is either allowed or not allowed by the employer's 401(k) plan.

Ok....let me word that differently.

If she happens to be in a circumstance where both the old plan and the new plan allow for rollovers into another 401k, then as an accountant I recommend that you NOT do that. I recommend instead that she roll the funds into an IRA.

[qurice]

Thanks for answering that question LdiJ!

She previously didn't roll over because she liked the offerings better, but is now wanting all the funds together. What are the disadvantages of rolling from one plan to another if they are qualified that you would not recommend it?

[LdiJ]

Originally Posted by qurice

Thanks for answering that question LdiJ!

She previously didn't roll over because she liked the offerings better, but is now wanting all the funds together. What are the disadvantages of rolling from one plan to another if they are qualified that you would not recommend it?

401K's often have an element of investment in the employer...therefore its often wiser, when you leave an employer, to roll the funds into an IRA, which is completely independent.

I am also a great believer in not having all of your eggs in one basket, therefore again, that is why I would recommend an IRA instead.