On Tue, 23 Oct 2007 13:01:02 -0500, "Elle"
<honda.lioness[at]nospam.earthlink.net> wrote:

- quote -


Could be but I thought all of his contributions were pre-tax.
Thumper

On Tue, 23 Oct 2007 13:01:02 -0500, "Elle"
<honda.lioness[at]nospam.earthlink.net> wrote:

- quote -

I may see him Thursday. I'll try to remember to ask.
Thumper

"Will Trice" <wwtrice[at]paragondynamics.com> wrote
- quote -

I was going from reading here the last several years,
recalling no posts reporting a stock brokerage option like
that in an IRA brokerage account. Plus general reports of
how retirement accounts overwhelmingly are mutual funds
focused. The following 2006 article says (7th paragraph from
the bottom) that only 3% of 401(k) participants are offered
the option to trade stocks (using a brokerage account) other
than company stock.
http://knowledge.wharton.upenn.edu/a...articleid=1405

I think one has to consider the history of 401(k)s. Namely,
they were legislated so as to help companies reduce the cost
of "pensions," reverting, as I know you know, from defined
benefit plans (whose costs were somewhat unknown to the
company) to defined contribution plans (whose costs were
much better known). Much talk on the net centers around
limiting choices (of any kind) to enrollees so as to keep
plan costs down (including keeping employees from losing
their shirts through, say, lack of diversification and/or
day trading). I imagine the larger the company, the more
individual stock trading choices it offers.

Elle wrote:

- quote -

An individual who takes a distribution will have 20% withheld to cover
the taxes. That's the amount that would have to be covered, because the
woman couldn't recover the withheld taxes until she filed 2007's return.

So I didn't say it quite right, it should have been, "If she could
cover the tax withholding . . ."




Brian

--
If televison's a babysitter, the Internet is a drunk librarian who
won't shut up.
-- Dorothy Gambrell (http://catandgirl.com)

"Thumper" <jaylsmith[at]comcast.net> wrote
- quote -

Without more info, I think it's pretty likely this was done
with after-tax contributions.

<wyu[at]talisys.com> wrote
[on in-service non-hardship 401(k) rollovers to Trad IRAs)
- quote -

Agreed. The strings attached are frightening. Notably, it
appears to apply only to after-tax 401(k) contributions.
Contributing after-taxes to 401(k)s surely is a rare animal.

- quote -

Part of the Sept 2007 paper at
http://www.economics.harvard.edu/fac...tionwealth.pdf
at first seems to suggest a fair amount of companies do
permit before 59.5 rollovers. Then one reads the fine print
of the table on page 27 and sees that the non-hardship
rollovers are, as I indicate above, permitted only with
after-tax contributions.

I wonder how many of the google hits for "in-service,
non-hardship rollover" and similar are a result of
advertisements for financial advising companies like the
following:

http://www.nylim.com/New_York_Life/C...D_05-04-06.pdf

This company is encouraging people to withdraw from 401(k)s
(and invest under its supervision and at its profit!),
claiming the greater number of options people have by doing
so, plus the tax-deferred growth, can justify it. Yikes.

Elle wrote:
- quote -

Is this still true? My 401(k) has a brokerage window and I know that
several companies in my industry also have this. But I've discovered
here that my industry is generally unusual in how it handles 401(k)s, so
possibly it is unusual here as well...

-Will

"Default User" <defaultuserbr[at]yahoo.com> wrote
[on a Suze Orman response to a caller]
- quote -

You wrote that "Suze told her that if she could come with
the money to cover the tax levy, she could put back the
money OR roll it into an IRA." So I thought you were writing
that Suze had said the caller would still have to pay the
income tax and penalty on the withdrawal.

I recall seeing a few sites that were emphatic about how
there was no way a 401(k) hardship withdrawal could avoid
the taxes and penalty, even if one changed one's mind and
wanted to return the money.

The 60-day rule that keeps getting mentioned applies to
those who withdraw 401(k) money /after/ leaving employment
with the 401(k)'s provider.

The law on IRAs does have a provision for taking a
penalty-free loan for up to 60 days. 401(k)'s do not have
such a provision, though.

My eyebrows went up at the alleged Suze Orman claim because
what you wrote seemed a too-easy way for people to ditch the
seeming oppressiveness of holding money in a 401(k) and
instead switch the money to a Traditional IRA. But this
circumvents the purpose of 401(k)s... There are reasons
401(k)'s have much higher contribution limits than IRAs
(generally speaking). E.g. it seems to me that the
government wrote the laws so that "experts" at companies
would play a significant role in managing employees'
retirement planning. Futhering the example, it's the rare
401(k) plan that allows employees to trade stocks
willy-nilly (or even at all).

Rich Carreiro <rlc-news[at]rlcarr.com> writes:
- quote -

Indeed, it's probably the most likely way that a
trustee-to-trustee transfer will happen. Usually
one goes and opens a new account at the brokerage
or wherever one is planning on transfering *to*.
They will give you an account number and tell you
how the check should be made out (ie. the new
trustee's name). You put all that information on
the forms you send in to your 401k provider (and
may need to get it notarized, too) and send it in.
The 401k will probably send a check to you at your
address - but the name on the check should be the
new custodians, not yours! If the check is made
out to you, contact the 401k provider IMMEDIATELY!
and get it straightened out. Do *not* cash it or
deposit it.

- quote -

And, as I said, you may have no choice in the matter.
Do look carefully at that check if they send it to you.

--
Plain Bread alone for e-mail, thanks. The rest gets trashed.
No HTML in E-Mail! -- http://www.expita.com/nomime.html
Are you posting responses that are easy for others to follow?
http://www.greenend.org.uk/rjk/2000/06/14/quoting

"Elle" <honda.lioness[at]nospam.earthlink.net> writes:
- quote -

There were changes under the 2001 EGTRRA, and further changes
under the 2006 Pension Protection Act - both of which increased
the opportunities for in-service distributions.

In particular, the 2006 law allows them for folks who are
still working but over 62.

This sort of thing is why I qualified my remarks earlier
by saying *in general* one cannot roll 401k money over
unless they leave that job. For most folks, in most cases,
that's the situation.



--
Plain Bread alone for e-mail, thanks. The rest gets trashed.
No HTML in E-Mail! -- http://www.expita.com/nomime.html
Are you posting responses that are easy for others to follow?
http://www.greenend.org.uk/rjk/2000/06/14/quoting

On Mon, 22 Oct 2007 19:04:24 -0500, wyu[at]talisys.com wrote:

- quote -


Very interesting. One of my co-workers at AT&T rolled his
contributions out of his 401k into an IRA at Fidelity a few years ago.
He wasn't 59 yet. Fidelity manages our 401K and they are the ones
that told him it was possible. It is hidden well within our plan
description.
Thumper

Elle wrote:

- quote -

It's possible that I misunderstood what she was saying.

- quote -

The response to the call was specifically given to prevent the tax and
penalty, hence mention of the 60-day period.

- quote -

Possibly my fault. Her advice on strategy and such is sometimes
controversial, but she does generally get technical things right.




Brian

--
If televison's a babysitter, the Internet is a drunk librarian who
won't shut up.
-- Dorothy Gambrell (http://catandgirl.com)

On Oct 22, 2:53 pm, "Elle" <honda.lion...[at]nospam.earthlink.net> wrote:
- quote -

This issue looks pretty messy. I have a whole bunch links that say
"some plans allow in-service, non-hardship rollovers". For example,
this link:

http://www.thestreet.com/funds/hayden/1016116.html

The below thread implies there was some changes in 2003 and employer
matching contributions can be transfered out but employee
contributions must remain in the original plan until some triggering
event.

http://socialize.morningstar.com/New...&convId=200411

Of course, 99.99% of plans don't offer in-service rollovers at all
(whether 59.5 or matching) so it's not a viable option to consider.

<wyu[at]talisys.com> wrote
On the legality of rollovers from a 401(k) to a Traditional
IRA while still working for the 401(k) provider:
- quote -

Do you have a citation for this alleged new law? It seems to
me such a law would fail a few common sense tests. Unless
Congress was trying to throw a tiny bone to some faction, I
am not seeing it. The most I found on it referred to
rollovers after age 59.5 but while still employed with the
company whose 401(k) is desired to be rolled over.

As for the Suze Orman anecdote, hardship withdrawals for
purchase of a residence have a number of strings attached.
The claim that, upon the home purchase falling through, the
money from the 401(k) could be rolled over to a Traditional
IRA seems suspect. I would think, since the taxes /and/
penalty are still required for such a hardship withdrawal,
the recipient could simply put the money into the
Traditional IRA, but I wonder whether that's actually a
"rollover." Orman covers (and is very much opposed to)
401(k) early withdrawals. I suspect important details were
left out here, or the situation was misheard. (Not to be a
cheerleader for Orman; merely to try to keep the thread
factual, at least as I know the "facts.")

The web seems to have a fair amount of chatter on "hardship
withdrawals" lately, due to people having taken on ARMs that
are destroying them. A good site that sheds more light seems
to be
http://www.401khelpcenter.com/mpower...re_121902.html

- quote -

My plan specifically states "Hardship withdrawals are not eligible for
rollover to another plan or IRA." It not say say whether a failed home
purchase can be cause to re-deposit the funds back to the 401(k). I
wouldn't presume she could roll it, but again, I have the one data
point, not the regs that spell this out. I'd be curious to find IRS docs
that spell this type of circumstance out, clearly.
JOE

joetaxpayer wrote:

- quote -

Ah, that makes sense. It would fit with the example on the show, where
the woman did take a distribution with the intent to buy a condo, so
presumably "hardship". As that fell through, she could then return it
if within the 60 days. I guess that she could indeed roll it over into
an IRA, presuming she could cover the tax withholding.




Brian

--
If televison's a babysitter, the Internet is a drunk librarian who
won't shut up.
-- Dorothy Gambrell (http://catandgirl.com)

On Oct 22, 9:30 am, "Default User" <defaultuse...[at]yahoo.com> wrote:
- quote -

In service 401K distributions/rollovers are a fairly new law change.
That means every plan started from before this change will not offer
this option. New or updated plans may offer it but it's up to the
discretion of employer to decide whether they will offer the option or
not.

BreadWithSpam[at]fractious.net writes:

- quote -

I know that Bread knows this, but I will point out that
a "trustee-to-trustee transfer" also includes having
a physical check being cut and mailed to you, BUT MADE
OUT TO THE IRA CUSTODIAN.

Depending on the competency of the old and new custodians, you
may consider this less risky then trying to get the old custodian
to properly remit the funds to the new custodian.

--
Rich Carreiro rlc-news[at]rlcarr.com

Default User wrote:

- quote -

I am not 100% on this, but this is my take;
One cannot take $10,000 from a 401(k) like an IRA for home purchase.
401(k) withdrawals while in service and not at retirement age, are
possible under 'hardship' withdrawal, and can be used for home purchase,
but this is different than the $10K IRA rule. This money is subject to
tax, and 10% penalty. For my company (A Fortune 500 company) the rules
on hardship withdrawal specifically state this money cannot be rolled
into an IRA. If my company is following IRS regs (and if not, why would
they make the non-rollover statement?) then either Suze is mistaken or
she misunderstood the caller, or you misunderstood the dialog.
I am open to the chance that my company is confused on the regs, IRA
rules tend toward confusion in all but the most simple issues.
JOE

BreadWithSpam[at]fractious.net wrote:

- quote -

Right, I think it's like 20% or so.

- quote -

This site had some information:

<http://www.phoenixwm.phl.com/html/taxlaw/page2-1.html
I'm still filtering through trying to figure it out. There's parts in
there about "eligible rollover distributions" and such. It's not clear
to me that one can just take money out of your 401(k) and do an IRA
rollover while still working there.




Brian

--
If televison's a babysitter, the Internet is a drunk librarian who
won't shut up.
-- Dorothy Gambrell (http://catandgirl.com)