Message Font: Serif | Sans-Serif
No. of Recommendations: 0
I've been cross posting this to the liquid lounge here's a summary of what I've written there.

Here is my understanding. As indicated in a previous response I believe that one can do an in-service (while-employed) 401K rollover to an IRA. Fidelity manages my 401K and I dicussed this option with them and they indicated it was possible. However I haven't done it yet.
This has also been discussed by Malco Berko which is an investment advisor that writes for the Daily Journal of Commerce. If you'd like more information I can provide you with his address.

I have not yet performed this rollover because I'm concerned about the loss of legal protections that the 401K currently provides me with. The fidelity representative explained that during bankruptcy and most lawsuits the contents of a 401K are protected. The contents of an IRA are not.

I suspect 401Ks are structured as some kind of jointly held trust between the employer and the employee. As such a judgement against either is not sufficient to lay claim on the assets contain therein. But, I'm not a lawyer so I don't know the specifics.

I read an article by Malcolm Berko an investment advisor who writes for the Daily Journal of commerce. I have the article right in front of me, dated Mon Dec 29, 2003. In the article, he explains that unless a plan contains specific language forbidding an "in-service rollover" ALL 401Ks can be rolled over "in-service" despite the fact that the plan administrator may claim it is impossible.
I'm not sure about the specifics of different plans, having only gone through this with fidelity. I know that I had argue with the fidelity representative before they admitted it could be done. Plan administrators are typically very relunctant to admit that an in-service rollover can be done.
At any rate it's probably worth checking up on.
Print the post  


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.