In-Service Withdrawal of rollover contributions from 401k.

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Topic Author
lkar
Posts: 182
Joined: Sat May 04, 2019 4:02 pm

In-Service Withdrawal of rollover contributions from 401k.

Post by lkar » Mon Jan 13, 2020 1:18 pm

The stuff I'm finding on the Interwebs about this is so confusing.

I have a 401(k). My wife has a solo 401(k). In addition to employee contributions (and employer contributions and catch up), the assets in both plans include money that came in by rollover from a rollover IRA from prior jobs. Both of the plans permit in-service withdrawals of rollover contributions (but not employee contributions).

Can we, without tax consequence, roll these funds back out of the 401(k)s to rollover IRAs while we are both still working and contributing to the plan? We are both under 59.5. How about gain attributable to the rollover sourced assets in the plan?

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tfb
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Re: In-Service Withdrawal of rollover contributions from 401k.

Post by tfb » Mon Jan 13, 2020 1:29 pm

lkar wrote:
Mon Jan 13, 2020 1:18 pm
The stuff I'm finding on the Interwebs about this is so confusing.

I have a 401(k). My wife has a solo 401(k). In addition to employee contributions (and employer contributions and catch up), the assets in both plans include money that came in by rollover from a rollover IRA from prior jobs. Both of the plans permit in-service withdrawals of rollover contributions (but not employee contributions).

Can we, without tax consequence, roll these funds back out of the 401(k)s to rollover IRAs while we are both still working and contributing to the plan? We are both under 59.5. How about gain attributable to the rollover sourced assets in the plan?
Yes, including gains on the rollover contributions. That's what this means -- "Both of the plans permit in-service withdrawals of rollover contributions." The question is, did your wife account for the rollover contributions separately from other employee and employer contributions in the solo 401k? Who's going to calculate how much those rollover contributions have grown into?
Harry Sit, taking a break from the forums.

Topic Author
lkar
Posts: 182
Joined: Sat May 04, 2019 4:02 pm

Re: In-Service Withdrawal of rollover contributions from 401k.

Post by lkar » Mon Jan 13, 2020 1:53 pm

tfb wrote:
Mon Jan 13, 2020 1:29 pm
Yes, including gains on the rollover contributions. That's what this means -- "Both of the plans permit in-service withdrawals of rollover contributions." The question is, did your wife account for the rollover contributions separately from other employee and employer contributions in the solo 401k? Who's going to calculate how much those rollover contributions have grown into?
Thank you very much. When the solo 401k was opened it was funded exclusively from a rollover from a rollover IRA, and I know what the contribution amount was from the the first statement that we received. All other contributions were made after that, so in terms of record keeping, I know what the contribution amounts were. The account has only ever had one mutual fund. Whenever we make new contributions, we add to that position. But in terms of figuring out what gain is attributable to the rollover contribution and what gain is attributable to the various little contributions over time, that might be difficult. It is with e*Trade and e*Trade does not seem to provide (on line at least) a breakdown of plan assets by source of contribution.

Spirit Rider
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Re: In-Service Withdrawal of rollover contributions from 401k.

Post by Spirit Rider » Mon Jan 13, 2020 3:55 pm

lkar wrote:
Mon Jan 13, 2020 1:53 pm
tfb wrote:
Mon Jan 13, 2020 1:29 pm
Yes, including gains on the rollover contributions. That's what this means -- "Both of the plans permit in-service withdrawals of rollover contributions." The question is, did your wife account for the rollover contributions separately from other employee and employer contributions in the solo 401k? Who's going to calculate how much those rollover contributions have grown into?
Thank you very much. When the solo 401k was opened it was funded exclusively from a rollover from a rollover IRA, and I know what the contribution amount was from the the first statement that we received. All other contributions were made after that, so in terms of record keeping, I know what the contribution amounts were. The account has only ever had one mutual fund. Whenever we make new contributions, we add to that position. But in terms of figuring out what gain is attributable to the rollover contribution and what gain is attributable to the various little contributions over time, that might be difficult. It is with e*Trade and e*Trade does not seem to provide (on line at least) a breakdown of plan assets by source of contribution.
There are different responsibilities in a 401k, there is a participant (employee), sponsor (employer), custodian, trustee, fiduciary, record keeper and administrator. A fiduciary is not applicable for a one-participant 401k, In most mainstream one-participant 401k plans, you are the participant, employer and administrator, It depends on the provider and your election whether there is a trustee, you are the trustee, there is a third party trustee or the provider is the trustee.

It is my understanding that E-Trade, Fidelity, Schwab, TD Ameritrade and Vanguard act as record keepers. It should be their responsibility to calculate the current balance of the original rollover contribution. If you have a plan where you selected a plan document to support the so-called "Mega Backdoor Roth" and/or alternative investments the so-called self-directed 401k. You are most likely the record keeper and would have to calculate this amount yourself.

Topic Author
lkar
Posts: 182
Joined: Sat May 04, 2019 4:02 pm

Re: In-Service Withdrawal of rollover contributions from 401k.

Post by lkar » Mon Jan 13, 2020 5:43 pm

Spirit Rider wrote:
Mon Jan 13, 2020 3:55 pm
lkar wrote:
Mon Jan 13, 2020 1:53 pm
tfb wrote:
Mon Jan 13, 2020 1:29 pm
Yes, including gains on the rollover contributions. That's what this means -- "Both of the plans permit in-service withdrawals of rollover contributions." The question is, did your wife account for the rollover contributions separately from other employee and employer contributions in the solo 401k? Who's going to calculate how much those rollover contributions have grown into?
Thank you very much. When the solo 401k was opened it was funded exclusively from a rollover from a rollover IRA, and I know what the contribution amount was from the the first statement that we received. All other contributions were made after that, so in terms of record keeping, I know what the contribution amounts were. The account has only ever had one mutual fund. Whenever we make new contributions, we add to that position. But in terms of figuring out what gain is attributable to the rollover contribution and what gain is attributable to the various little contributions over time, that might be difficult. It is with e*Trade and e*Trade does not seem to provide (on line at least) a breakdown of plan assets by source of contribution.
There are different responsibilities in a 401k, there is a participant (employee), sponsor (employer), custodian, trustee, fiduciary, record keeper and administrator. A fiduciary is not applicable for a one-participant 401k, In most mainstream one-participant 401k plans, you are the participant, employer and administrator, It depends on the provider and your election whether there is a trustee, you are the trustee, there is a third party trustee or the provider is the trustee.

It is my understanding that E-Trade, Fidelity, Schwab, TD Ameritrade and Vanguard act as record keepers. It should be their responsibility to calculate the current balance of the original rollover contribution. If you have a plan where you selected a plan document to support the so-called "Mega Backdoor Roth" and/or alternative investments the so-called self-directed 401k. You are most likely the record keeper and would have to calculate this amount yourself.
The plan permits Roth elective deferrals, though we've never made one. Employer profit sharing contributions must be pre-tax. It does not allow alternative investments.

I'll just send a secured message asking if they have tracked the contributions. Calling is usually pretty difficult, but I find that with secured messages they eventually get routed to the right place. I'll see what they say and follow up here.

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