Skip to main content
No. of Recommendations: 0
BeenFooled asks:

<<I am now trying to get a little bit more deeply into this matter. Are there any other drawbacks to this "tainting" (which I think the IRS calls "commingling")?
For example, does the age at which we can begin withdrawing change? The taxable status of the fund at withdrawal? The penalties for early withdrawal? I am just grasping here - I just want to understand all the implications of commingling, though I am not worried at this point about my inability to roll back into a 401(k) as a result.>>

Other than the ability to transfer the money into a future employer's qualified retirement plan, all other rules for commingled IRAs are the same as those for other IRAs regarding taxation and withdrawals.

FWIW, the biggest reason IMHO for not commingling the money is early retirement. You can retire as early as age 55 in a qualified plan and get at the money without penalty. In an IRA you must wait until age 59 1/2 or use a lifetime payment method under the rules of Section 72t of the IRC. If you work for a company that allows transfers of money to its plan from an old employer's plan, then you could transfer a conduit IRA to that plan and then retire in the year you turn age 55. That money would then be fully accessible, whereas it wouldn't be in the IRA for another 4 1/2 years unless you use 72t withdrawals.

Print the post  


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.