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Avanti1 writes:

<<I was told by the Trade Broker that you are allowed to transfer an account from your current 401K into an IRS rollover account as long as you do not add contributions to the account (this is called "commingling"). You are able to roll the money to another employers 401K at a later date. Two questions: What's commingling ? And Why do you feel only the employer's contribution can be transfered ? I would have thought the employer's contribution must stay in the plan and my contributions could be transfered.>>

You are still employed by the company that sponsors the plan. Therefore, as I stated in my previous reply, generally you may not make an in-service withdrawal from your plan for the purposes of rolling that money to an IRA unless the plan permits it. Even then, the transfer will be limited to your employer's contributions. Your pre-tax contributions must stay inside the plan until you leave that job. Sometimes, if separate accounting was employed for that money, you may take your after-tax contributions plus some earnings thereon. You must keep the after-tax part of the distribution, but the earnings may be rolled to an IRA. That's a very complicated subject I don't want to get into. And again, the plan must permit such an in-service withdrawal. I "feel only the employer's contribution can be transfered" while you're still working for that employer because that's the law. Also, I feel you were sadly misled by an unknowledgeable clerk at Trade Broker.

"Commingling" means you mix money in an IRA that came from an employer's qualified retirement plan (e.g., a 401k plan) with IRA contributions you made on your own. Keep the 401k money separate from all other IRA money, and someday you may transfer that money into a new employer's 401k plan provided that plan accepts rollover money from an old employer's plan. Mix the 401k money with other IRA money (i.e., commingle it), though, and the rollover IRA is "tainted" in the eyes of the IRS, thus rendering it ineligible for transfer/rollover to an new employer's plan.

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