Would someone under the age of 59.5 be able to move their 401(k) elsewhere without incurring a penalty if they are no longer able to contribute to it due to a company retirement plan change?
For years, a company was for profit and employees had 401(k)s. A few years ago they went non-profit and everyone got 403(b)s. They didn't move the money that was in the 401(k)s to the new 403(b)s and they can no longer contribute to the 401(k)s. Would someone under the age of 59.5 be able to move his 401(k) elsewhere without incurring a penalty, since they can no longer contribute to it? This is assuming they still work there, but are now only contributing to the 403(b).
Usually if a plan is ended employees have the opportunity to move money out of it. However, sometimes there is a window that is only open so long to do the transaction. Your best bet is to ask your HR person or call the company that has the plan and ask them.
You can absolutely move your 401(k) to a rollover IRA (or Roth portion to a Roth if there is one). There is no penalty for doing so. If you do a direct rollover, meaning the custodian holding your 401(k) sends the funds directly to the custodian where your IRA will be, there is no 60-day rule you have to worry about. If they issue you a check with taxes withheld, however, you have to follow the 60-day rule and send the check in plus the entire amount of taxes withheld to your new IRA custodian within 60 days to avoid paying the 10% early withdrawal penalty plus ordinary income taxes. If you only send in the check and not the amount of taxes withheld, you could be subject to the penalty. Hope this helps!
Yes, a 401(k) account owner has the right to move their money wherever they choose. In order to avoid penalties and taxes, these funds would need to be moved/transferred to either the new 403(b) or into a traditional/rollover IRA. A couple of benefits gained for moving to the 403(b) could consolidation of funds/accounts (simplification) while also possibly generating more creditor protection for the investor. Alternatively, some potential benefits of the traditional/rollover IRA could be lower investment costs and improved fund selections.
Best of luck! I hope this brief bit of information is helpful.
I would ask if the plan is officially "shut down." It seems odd that the 401k is still there but if active and you are still employed, then the funds have to stay there until you separate from service or they shut down the plan / terminate it.
We would urge you to call the 800 # thats on your statment. We typlically found that when a company changes the 401k vendor, the participant is allowed to move thier acct to an IRA.
If you can move it, it may be wise. There are some companies that can offer you some upside potential with no downside risk, that your retirement plan cant give you. Also 59.5 is what is called a qualifying event, so my guess is you can move it.
Happy to help and happy holidays