Separation from Service
Have a client who has participated in an employer 401k and PS plan. The individual is a w-2 employee and has not worked in over 6 months. Does not have a formal termination agreement or resignation letter. Wants to roll his IRA over to an Individual IRA.
Is there a formal definition of Sep. of Service that will allow him to rollover his account?
Permalink Submitted by Alan - IRA critic on Wed, 2015-12-09 18:14
No, there is no definition in the tax code, although the technical term for this is “severance from employment”. It is up to the individual plan document to define which conditions constitute a severance. If the plan will not allow a rollover, it is because they do not consider him severed at this time. If he is recognized as severed, they must by law allow a rollover.