401(k) 59 1/2 IRA rollover in-service distribution
Hello,
I realize that the law now allows for in-service distributions (in this case a rollover distribution to an IRA) after 59 1/2. My question is can a 401(k) plan NOT allow in-service distributions after age 59 1/2 … or must an in-service distribution request once a partcipant turns 59 1/2 be allowed?
I am not sure whether a 401(k) plan must give explicit permission to allow for in-service distributions after 59 1/2, or if the law says that age 59 1/2 is automatically a qualifying event for 401(k)s, regardless of whether the participant is working or retired.
Thank you!
Permalink Submitted by mk foss on Fri, 2012-10-12 17:22
Each plan can select its own options for in-service distributions. Internal Revenue Code prohibits distribution of employee deferreals before age 59-1/2; that’s why there are hardship withdrawal rules. There is no requirement that a plan allow any in-service distributions. You need to check with each particular plan. I’ve worked for small companies over the last 20 years and none of them offered in service distributions. A plan can be amended to add such a feature.