Can I Rollover My 401k While Still with My Current Employer?

The 401k plan is an excellent method for saving for retirement – as long as your current employer offers sound investment options that allow you to diversify and assume as much risk as you can tolerate.

However, employees who are not happy with the current state of their 401k plan may want to consider a 401k rollover to get their funds into better investment vehicles for their specific needs.

While the law typically says no to the question, “can I rollover my 401k while still with my current employer,” there are some exceptions to the rule. We'll cover some of those exceptions to help you find the loophole you need to move your investment funds to greener pastures.

What Funds Can be Rolled Over?


Under any circumstances, there are funds in a 401k plan that can be rolled over at any time. These include employer contributions and after-tax employee contributions. This money can be part of a 401k rollover at any time, without worry over tax or early withdrawal penalties.

However, tax-deferred employee contributions fall into a very different category, and employers can limit rollovers on these funds in 401k plans.

The good news is that many employers make provisions for even these funds to get rolled over in very limited circumstances.

The In-Service 401k Rollover


Under normal circumstances, members of 401k plans are not able to perform a 401k rollover of tax-deferred employee contributions unless they hit the official retirement age or stop working for the company. This left many employees stuck in 401k plans that were simply not a good fit for their specific financial needs. However, many employers do allow for limited 401k rollovers, even for employees that are still with the company and a long way from their retirement years.

Known as the in-service 401k rollover, this provision allows you to rollover your 401k while still with your current employer. Rollovers from a 401k plan are allowed by law, but not by all employers. Some that do allow for 401k rollovers do so in very limited circumstances and for very specific reasons.

Most employers that do provide an in-service 401k rollover do not make it a matter of public information; instead, employees must search out the information on their own. However, those that do often find they can complete a rollover from their 401k plan that gives them more flexibility, profitability and diversity in their retirement investments overall.

How to Rollover Your 401k


If you are serious about rolling over your 401k while still with your current employer, the place to begin is with your employee benefits department. It is also a good idea to talk to your financial advisor to find out if a 401k rollover is really the best solution for your financial plan, since you may need to jump through a number of hoops to get the money moved.

If a 401k rollover is in your best interests, the time it takes to move the money out of your 401k plan will undoubtedly be well worth the effort.
Tim Ord
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