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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.

Regards..Pixy
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