Silly 401k Question: Roll out rollover?

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archbish99
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Silly 401k Question: Roll out rollover?

Post by archbish99 » Tue Dec 04, 2018 4:23 pm

I know that I can't roll out my pre-tax contributions or my employer's contributions while I'm still employed. However, I rolled my account from my previous employer's 401k into my new employer's 401k, and they promptly reworked their fee structure in an unpleasant fashion. Do I have the option to roll out the portion that was rolled in, since it's still tracked separately?

If so, putting it in an IRA would effectively block back-door Roth contributions, but my current employer offers after-tax 401k contributions which I can roll to Roth, so that's tolerable. (I assume taking it back to my former employer's plan isn't an option.)
I'm not a financial advisor, I just play one on the Internet.

JBTX
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Re: Silly 401k Question: Roll out rollover?

Post by JBTX » Tue Dec 04, 2018 4:28 pm

archbish99 wrote:
Tue Dec 04, 2018 4:23 pm
I know that I can't roll out my pre-tax contributions or my employer's contributions while I'm still employed. However, I rolled my account from my previous employer's 401k into my new employer's 401k, and they promptly reworked their fee structure in an unpleasant fashion. Do I have the option to roll out the portion that was rolled in, since it's still tracked separately?

If so, putting it in an IRA would effectively block back-door Roth contributions, but my current employer offers after-tax 401k contributions which I can roll to Roth, so that's tolerable. (I assume taking it back to my former employer's plan isn't an option.)
Does your plan allow "in service distributions"? If so, you can roll funds out. If you can roll out after tax 401k contributions to an external Roth, that sounds like in service distributions.

Ultimately only your plan administrator can answer whether you can roll funds out or not while still employed. You should ask them directly.

cherijoh
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Re: Silly 401k Question: Roll out rollover?

Post by cherijoh » Tue Dec 04, 2018 4:39 pm

archbish99 wrote:
Tue Dec 04, 2018 4:23 pm
I know that I can't roll out my pre-tax contributions or my employer's contributions while I'm still employed. However, I rolled my account from my previous employer's 401k into my new employer's 401k, and they promptly reworked their fee structure in an unpleasant fashion. Do I have the option to roll out the portion that was rolled in, since it's still tracked separately?

If so, putting it in an IRA would effectively block back-door Roth contributions, but my current employer offers after-tax 401k contributions which I can roll to Roth, so that's tolerable. (I assume taking it back to my former employer's plan isn't an option.)
That is something you would need to discuss with your current plan custodian. For the plans for which I'm familiar, this is a non-reversible transaction.

If you did a complete rollover from your former employer's plan I would be very surprised if they let you roll the funds back into that plan. After a complete rollover, you account would be considered closed.

Spirit Rider
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Re: Silly 401k Question: Roll out rollover?

Post by Spirit Rider » Tue Dec 04, 2018 6:01 pm

A rollover contribution is always distributable at anytime. However, it is uncommon for a 401k plan to accept rollover contributions from a previous employee. One such exception is the TSP, but even they require you have maintained a >= $200 balance. If you did a rollover of your entire balance there is likely zero chance a previous employer would accept a rollover contribution.

bkweathe
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Re: Silly 401k Question: Roll out rollover?

Post by bkweathe » Tue Dec 04, 2018 6:13 pm

archbish99,

My employer will allow me to roll out my rollover, and I plan to do so for reasons similar to yours. It looks like a fairly simple process.

I think that Spririt Rider is saying that the ability to do this is a legal requirement. I can't confirm that, but I have no reason to think it's not.

I suggest you talk to your HR folks or other appropriate people at work and ask what the procedure is.

Brad

123
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Re: Silly 401k Question: Roll out rollover?

Post by 123 » Tue Dec 04, 2018 6:48 pm

Rolling out a rollover can involve a couple of additional issues. I was in one plan that permitted it, which is one of the reasons I decided to do the rollover from the old employer to the new employer's plan. In reality I never had a need to roll it back out.

Something to consider is the mechanics of the roll out if they permit it. It's possible that they could allow roll out of the rollover dollar-for-dollar but any earnings or gain on the rollover might not roll out with it. The other side of the coin is if there had been a market decline in the value of the account would they still do a dollar-for-dollar roll out or would they apply some kind of reduction factor? Many plans and custodians can accommodate far more complex issues than are often apparent by using a number of sub-accounts that track all kinds of things. Often these are transparent to the employee.
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Spirit Rider
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Re: Silly 401k Question: Roll out rollover?

Post by Spirit Rider » Tue Dec 04, 2018 7:07 pm

Rollover contributions and their earnings must be "separately accounted" for. Accounts are all a virtual construct.

The amount distributable from the "account" based on its current value. In other words, original rollover contribution + gains - losses.

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archbish99
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Re: Silly 401k Question: Roll out rollover?

Post by archbish99 » Wed Dec 05, 2018 4:27 pm

I just called Fidelity to confirm, and as mentioned above, I am allowed to roll back out the rollover funds at any time. Also as expected, once I'm no longer an employee, I can roll out but can't roll in.
I'm not a financial advisor, I just play one on the Internet.

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Earl Lemongrab
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Re: Silly 401k Question: Roll out rollover?

Post by Earl Lemongrab » Thu Dec 06, 2018 1:51 am

archbish99 wrote:
Tue Dec 04, 2018 4:23 pm
I know that I can't roll out my pre-tax contributions or my employer's contributions while I'm still employed.
You don't know the highlighted part because it isn't true. Your plan might not allow it, but the law doesn't prohibit it.
However, I rolled my account from my previous employer's 401k into my new employer's 401k, and they promptly reworked their fee structure in an unpleasant fashion. Do I have the option to roll out the portion that was rolled in, since it's still tracked separately?
As others have said, it law allows it. Megacorp provided that when I worked there. Still does, and I can roll the various components out separately, but it's no real difference.
This week's fortune cookie: "Your financial life will be secure and beneficial." So I got that going for me, which is nice.

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archbish99
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Re: Silly 401k Question: Roll out rollover?

Post by archbish99 » Fri Dec 07, 2018 6:38 pm

Earl Lemongrab wrote:
Thu Dec 06, 2018 1:51 am
archbish99 wrote:
Tue Dec 04, 2018 4:23 pm
I know that I can't roll out my pre-tax contributions or my employer's contributions while I'm still employed.
You don't know the highlighted part because it isn't true. Your plan might not allow it, but the law doesn't prohibit it.
Hrm, something else to ask about when I do this, then. I've already done a back-door Roth in 2018, so I don't want to have a balance in Traditional IRAs on December 31. There's a check in the mail for my meager after-tax contributions which is going into my Roth as well. But in 2019, I'll probably do this rollover and inquire about which subaccounts I can roll out under the plan rules.
I'm not a financial advisor, I just play one on the Internet.

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