401K to Personal IRA

[RedlinRamsey]

What is the name of your state? Maryland

Its time for me to close out my 401k at work. I have stopped making contributions and and would like to move it into a personal IRA at my bank. I haven't been to the bank as yet but am going soon. I would like to know if anyone has information on what the procedures are and what I can expect. Thank you...What is the name of your state?

 

[cbg]

Are you still employed by the employer who offered the 401k?

 

[RedlinRamsey]

Yes. Also, I understand that some employers prohibit this if you are still with the same employer. But I have checked with the Plan Administrator and he assures me that the company that I work for does not prohibit this.

 

[cbg]

The company may not. The law does.

If you are still employed there, it is ILLEGAL for them to let you transfer monies out of the 401k plan. You can take a loan, if a loan is permitted under the plan. There are certain hardship withdrawals which can be taken, though they are strictly limited.

But if your plan administrator is telling you that the company will allow you to transfer all your monies out of the 401k account into a personal IRA while you are still employed there, then the plan administrator does not know the law. They are risking having the IRS invalidate the entire plan if they permit this.