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If my company agrees could I separate from employment roll over the 401k then get rehired? Is there a certain time frame that I would have to be separated?

Forum|Forum|7 years ago
June 1, 2019
2 replies
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I'm not happy with the high fees and limited selections in my 401k.

Best answer by dmertz

Once you have separated from service, the plan must allow you to roll the balance in the plan over to an IRA. They must also allow you to do so by direct rollover to avoid tax withholding. It's up to the employer to define what is meant by no-longer employed, but once they consider you no longer employed and permit a rollover to another retirement account, nothing you do after the rollover affects the status of the rollover. They is no justification for them to retroactively make it a hardship distribution that is ineligible for rollover.

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dmertzAnswer

Employee

Once you have separated from service, the plan must allow you to roll the balance in the plan over to an IRA. They must also allow you to do so by direct rollover to avoid tax withholding. It's up to the employer to define what is meant by no-longer employed, but once they consider you no longer employed and permit a rollover to another retirement account, nothing you do after the rollover affects the status of the rollover. They is no justification for them to retroactively make it a hardship distribution that is ineligible for rollover.

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Devin11_2

Employee

As far as the IRS is concerned, you can roll funds from a 401k into a personal IRA whenever you want, regardless of employment status. Some 401k administrators will allow for an "in-service withdrawal", which just means you ask them to roll the funds into your own personal IRA. But assuming your intent is to simply roll funds from a 401k to an IRA, then the only limits on doing that are your employer and the 401k administrator.

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dmertz

Employee

For someone under age 59½, the only portion that can be distributed while still employed are amounts attributable to employer contributions (or to amounts rolled in from another plan). By law, in-service distributions of amounts attributable to employee elective deferrals or Roth contributions are *not* permitted to be distributed from the plan prior to the employee reaching age 59½, except as a hardship distribution and a hardship distribution is not eligible for rollover.