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Author: OrcasIslander One star, 50 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 25239  
Subject: Question about Rollover Date: 5/20/2007 9:33 AM
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Good Morning,

I have a 401K at work and have a question about moving it. If I leave my job, I know that I want to roll it over without causing a tax event. My question is this....I own stocks in this account so if I rolled it over, would I have to sell my positions or do they just wave a magic wand and make it happen?

Hoping I can get an answer without calling my plan administrator.(that probably is the answer) Does anyone have any experience with this situation?

Thanks,

OI
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Author: aj485 Big gold star, 5000 posts Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 21935 of 25239
Subject: Re: Question about Rollover Date: 5/20/2007 9:41 AM
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I have a 401K at work and have a question about moving it. If I leave my job, I know that I want to roll it over without causing a tax event. My question is this....I own stocks in this account so if I rolled it over, would I have to sell my positions or do they just wave a magic wand and make it happen?

Hoping I can get an answer without calling my plan administrator.(that probably is the answer) Does anyone have any experience with this situation?


In general, a rollover will force you to sell your positions, and re-buy if you want to keep them.

However, if you can find a new trustee that will do a trustee-to-trustee transfer (rather than a rollover), you may be able to preserve your positions in the account.

You also have the option of leaving your 401(k) intact at the old company as long as you have a balance of more than $5k. You need to be aware of any additional fees that you might be charged because you are now a former employee, but if you can't find another way to keep the stocks that you want, it could be an option.

AJ

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Author: whyohwhyoh Big red star, 1000 posts Old School Fool CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 21937 of 25239
Subject: Re: Question about Rollover Date: 5/20/2007 11:35 AM
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In general, a rollover will force you to sell your positions, and re-buy if you want to keep them.


Why?

Trustee-to-trustee?

Never heard of this.

I own stocks as well inside a brokerage account in my 401k. When leaving I don't want to stay due to "high" fees.

--
whyohwhyoh

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Author: Fuskie Big funky green star, 20000 posts Top Favorite Fools Old School Fool Ticker Guide SC1 Red Winner of the 2010 Rule Breakers Challenge Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 21939 of 25239
Subject: Re: Question about Rollover Date: 5/20/2007 3:33 PM
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Trustee-to-trustee? </i/

In most cases you have to roll over the cash value but not all cases. For example, the 401k with the FEWMNBN™ had positions in 4 mutual funds that were closed to new investors. I did not want to lose those positions because I could not get back in and they were (and still are) good funds. Fortunately, my 401k was with Fidelity and they helped me roll over the 401k intact into a Traditional IRA. Later I further rolled over half the account to Scottrade where I began investing in equities at $7/share instead of $12/share but I still have a mix of funds and equities over at Fidelity.

Fuskie
Who notes that the FCE™'s 401k is also with Fidelity so I now have 2 accounts there along with 4 accounts at Scottrade...

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Author: aj485 Big gold star, 5000 posts Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 21943 of 25239
Subject: Re: Question about Rollover Date: 5/20/2007 8:47 PM
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Why?

Because, unless you are moving from a 401(k) at Administrator A to a Rollover IRA at Administrator A, they are losing your money and no longer will be able to count it as part of their 'assets under management'. They are trying to discourage you from moving your money out of their firm. When doing a rollover, one of the methods is to force you to sell all of your positions unless you move the money to an IRA under their managment.

Trustee-to-trustee?

Never heard of this.


Here you go, from IRS Publication 590 ( http://www.irs.gov/pub/irs-pdf/p590.pdf ):

Trustee-to-Trustee Transfer
A transfer of funds in your traditional IRA from one trustee directly to another, either at your request or at the trustee's request, is not a rollover. Because there is no distribution to you, the transfer is tax free. Because it is not a rollover, it is not affected by the 1-year waiting period required between rollovers. This waiting period is discussed later under Rollover From One IRA Into Another.

For information about direct transfers from retirement programs other than traditional IRAs, see Direct rollover option, later.


If you want to move the same money to a different administrator more than once in the same year, this is the only way to do so without incurring penalties.

I own stocks as well inside a brokerage account in my 401k. When leaving I don't want to stay due to "high" fees.

Then you may be forced to sell and (hopefully) re-buy your positions, depending on your administrator's rules. As Fuskie pointed out in his post, he was able to move some of his positions directly from a 401(k) at his administrator to a rollover IRA, also at his administrator. If he had moved the funds to a different administrator, he would not have been able to keep the positions he had, and some of his funds were closed to new investors. If you are unwilling to stay with your administrator because of high fees, this may not be an option for you.

AJ

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Author: foolazis Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 21950 of 25239
Subject: Re: Question about Rollover Date: 5/21/2007 11:01 AM
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I have a 401K at work and have a question about moving it. If I leave my job, I know that I want to roll it over without causing a tax event. My question is this....I own stocks in this account so if I rolled it over, would I have to sell my positions or do they just wave a magic wand and make it happen?

Is this through a brokerage window? In my plan, I have to close the brokerage window if I leave the plan (i.e. lose my job), which means selling the positions I have and moving the money into the stable value choice within the regular 401(k) choices before I can roll it over. You need to check with the specific terms of your brokerage window account.

foolazis


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Author: OrcasIslander One star, 50 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 21956 of 25239
Subject: Re: Question about Rollover Date: 5/21/2007 10:34 PM
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Thanks to All!

Not familiar with "brokerage window" but, this sounds like the same thing.

We have an administrator who handles the "master account" Any contributions go directly into the master and then can be swept out into my trading accnt. I just need to leave a $500 minimum balance in that account. ( I assume so they can charge me fees easily) and the balance can be transferred by them at my request to my PCRA account at Schwab. At any time I can move those funds back to the master account to be invested in their offerings of mutual funds.

It has been a good program for me so far. I am just thinking out loud and trying to decide the best course of action.

Thank you all for your input!

OI



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