401(k) In Service Distribution/Withdrawals

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kerplunk
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401(k) In Service Distribution/Withdrawals

Post by kerplunk » Sun Mar 02, 2014 7:54 pm

Can someone please explain how this works and when it would be beneficial to use?

Would it be helpful in the following scenario?

Joe Smith, age 30, has $100,000 in his taxable account and is currently maxing out his 401(k) and Roth IRA (via backdoor Roth method) for a total of $23,000 in tax-advantaged accounts. His 401(k) allows in service withdrawals. Is it possible to use this method to--more or less--transfer the $100,000 into 401(k) and then rollover to his Roth IRA?

Thanks :)

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tfb
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Re: 401(k) In Service Distribution/Withdrawals

Post by tfb » Sun Mar 02, 2014 8:00 pm

You need this plan to also allow after-tax non-Roth contributions. Search for "after-tax non-Roth" on these forums.
Harry Sit, taking a break from the forums.

placeholder
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Re: 401(k) In Service Distribution/Withdrawals

Post by placeholder » Sun Mar 02, 2014 9:48 pm

Even if after tax were allowed you couldn't put 100k into one plan because the total limit of deferrals + employer contributions + after tax would be 52k at that age.

kerplunk
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Re: 401(k) In Service Distribution/Withdrawals

Post by kerplunk » Sun Mar 02, 2014 9:50 pm

placeholder wrote:Even if after tax were allowed you couldn't put 100k into one plan because the total limit of deferrals + employer contributions + after tax would be 52k at that age.
Thank you for your reply. That makes a lot of sense. Still, that's an extra ~$25k that would be under a tax-advantaged account that wouldn't have been before. Awesome, awesome!

placeholder
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Re: 401(k) In Service Distribution/Withdrawals

Post by placeholder » Mon Mar 03, 2014 1:23 am

Again don't get too excited until you find out the particulars of your plan like if they allow after tax and provide in service rollovers also some restrict the amount of salary you can contribute like my company is 30% so that limits how much total can be contributed.

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