Skip to main content
No. of Recommendations: 0
Alice,

I don't understand why someone can't roll the 401K money into an IRA. I did it 6 years ago without a problem and was planing to do it again when I leave this job. It had to be a rollover IRA and the money had to be sent directly to the IRA not to the employee to avoid a 20% withholding. If you have the 20% withheld you need to come up with that money too or get a penalty for early withdrawal. The 20% is not your tax it would be much more so you should roll it over.

All that you say applies, but only to pretax contributions, company contributions, and the earnings on all contributions to a 401(k). What the original poster was dealing with was the question of what would happen to the post-tax contributions in a 401(k). In your case, you probably had made no post-tax contributions to your 401(k), so you didn't encounter this situation.

I performed a 401(k)-to-IRA rollover in 1998, and as I had expected, I received a check from the 401(k) administrator for the total amount of all post-tax contributions I had made. This money can come in handy, because it can be invested and ultimately result in long-term capital gains, which are taxed at a lower rate than IRA withdrawals.

Hope this helps,
Phooley
Print the post  

Announcements

The Retirement Investing Board
This is the board for all discussions related to Investing for and during retirement. To keep the board relevant and Foolish to everyone, please avoid making any posts pertaining to political partisanship. Fool on and Retire on!
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.