401 info
I am reading Mr. Ed Slott book “The retirement Savings Time Bomb” edition 2003.
The sentence “a typical 401(k) does nnot allow taking distributions over an
extended period of time, as is permitted wih an IRA”. This is an eroneous
statement since I been taking 401 distributions for the past 15 years.
Your comments please.
Permalink Submitted by Alan Spross on Fri, 2012-02-24 20:50
The statement was probably more true 9 years ago than today. Today, many plans want to retain assets to lower the costs of operating the plan. There are also different approaches to in service distributions, and beneficiary options than a decade ago.
Since 401k plans can now accept rollovers from IRA accounts, employees that roll their pre tax IRA balance into an employer plan should check to see what the distribution options are for those assets as opposed to the employee deferrals made directly to the plan.
Permalink Submitted by mk foss on Sat, 2012-02-25 00:03
I think what Ed’s book was referring to is the availability of 401k distributions for the beneficiary of a deceased plan participant. This was such a problem that a law was passed in 2006 allowing the beneficiary of a qualified retirement plan to have the balance transferred to an inherited IRA for the beneficiary’s benefit.
Retirement plan administrators are happy to deal with retired employees but generally are not anxious to deal with the beneficiaries of those employees.