Maximization of Rule 55 by consolidating IRA assets into the 401k
The client will be 55 when he retires in January of 2024. He will have 3 million in profit sharing, however he will NOT have access to any of the profit sharing until Late 2025.
He currently has $60k in the existing company 401k plan
He has $60k in a traditional IRA.
**Can he consolidate his IRA into his 401k now and then in January of 2024 use rule 55 for the entire 401k balance of $120k?
or
Will the that’s being consolidated into the 401k plan be excluded from the rule 55?
Other instruments will be used for the individual, but this piece will be needed for a secure retirement.
Permalink Submitted by Alan - IRA critic on Thu, 2023-05-11 16:26
Yes, IRA funds rolled into the 401k will be eligible for the age 55 separation from service penalty exception along with the 60k already in the 401k, as long as the plan will accept IRA rollovers. Some plans accept IRA rollovers from rollover IRA accounts only, not from contributary IRA accounts. The PS contribution will also qualify once it is deposited.
Permalink Submitted by Tony Toupin on Mon, 2024-02-05 21:26
Its not that I don’t trust you but I need some authortative reference on file. Is there a revenue code or a case that I could reference for my file?