Rolling IRA into 401k
If individual has new job with 401k (or 403b), and the company or institution and it’s plan administrator allows it, is it legal for an individual to transfer any IRA money into their new 401k (or 403b)? This would possibly convert non-qualified money into qualified money. Again, is this legitimate?
Permalink Submitted by Alan Spross on Thu, 2008-09-04 22:56
Yes, the transfer of an IRA into an accepting employer plan has been available since 2002. Some employer plans will accept conduit IRA accounts but not accounts to which regular contributions were made, due to the risk of accepting after tax amounts. The employer plan cannot accept any after tax (basis) amounts in an employee’s IRA accounts. With respect to a 403b or 401k, the transferred funds would be considered eligible for the age 55 separation exception as well as employer plan RMD requirements of the plan and plan loans.