401k alternative
I have a client who is unhappy with her current employer’s 401k plan. She wants to roll her 401k out to an IRA while still an employee of this company. She is under age 55. Her plan does not allow for in-service distributions. Any ideas?
Permalink Submitted by Alan Spross on Fri, 2007-08-10 23:19
The only complete solution is to separate from service, and that is obviously extreme unless there are other reasons to justify that decision.
However, as long as she remains there, she should make sure she maxes out her IRA contribution (TIRA or Roth) before contributing any non matched contributions to the 401k. If she is getting a match, it is hard to improve on the 401k to the extent of the match, even if the funds go into a basic money market or stable value investment.
If there is enough employee support and agreement about plan deficiencies, she can get with other staff and do some lobbying to fix the problem. And if she talks to other employees, knowing the plan, perhaps they will have a solution to her problem.