Calm Man wrote:OP posed 2 questions and one remains unanswered about inservice withdrawals. I have on of these accounts and I don't think inservice withdrawals are allowed. But unless you are actually cashing them out, rolling a self employed 401K to a traditional IRA at Vanguard wouldn't really provide any benefit (unless there is some aspect which has not bee noted in your post).
The I401K plan used by Vanguard has the full adoption agreement posted in the PDF kit, you would need to read the ins and outs of Section 5 on distributions. The answer is it depends:
C. Distributions During Employment
1. In-Service Withdrawals—If this is a profit sharing plan, unless the Adoption Agreement provides otherwise, a Participant who is not otherwise eligible to receive a distribution of their Individual Account may elect to receive an in-service distribution of all or part of the Vested portion of their Individual Account attributable to Employer Contributions other than those described in Plan Sections 5.01(A)(2) and 5.01(C)(2)(b), subject to the requirements of Plan Section 5.10 and further subject to the following limits.
a. Participant for five or more years—An Employee who has been a Participant in the Plan for five or more years may withdraw up to the entire Vested portion of their Individual Account.
b. Participant for less than five years—Except as otherwise provided in the Adoption Agreement, an Employee who has been a Participant in the Plan for less than five years may withdraw only the amount which has been in their Individual Account attributable to Employer Contributions for at least two full Plan Years, measured from the date such contributions were allocated.
And potential benefits I can think of are:
1) Access to admiral shares
2) Remove need for form 5500EZ reporting by lowering the plan balance
That said, 401Ks often get better protection from creditors than IRAs so I'm not sure it is worth it...