NOT ROLLING OVER qualified pension to avoid co-mingled IRA money
I have $ in a qualified retirement plan when I was self employed – that ended as my medical practice is in a new corporate 401K plan. I also have a Roth IRA that I make annual ‘back-door’ conversions to from my non-deductible IRA contributions. If I rollover the old self-employed retirement pension plan, obviously the IRA monies will be co-mingled with any new conversion from the non-deductible IRA contribution, which takes away the advantage of having the Roth. My pension guy says that I now have no sponsor for the old plan and I cannot keep it open without rolling it over for more than a short time. I am not sure. Do I have to do a Rollover IRA? Is there some mechanism to leave it in the old pension (w/ Schwab) without having it go to an IRA format??
Permalink Submitted by Alan - IRA critic on Fri, 2015-08-14 17:16
The simple solution would be to directly roll the old plan directly into your new 401k plan if the 401k will accept rollovers. Or if it will accept IRA rollovers, you could roll the old plan into a rollover IRA and then roll the IRA into the 401k. What type of plan is the old plan?
Permalink Submitted by JEFF BERKOWITZ on Fri, 2015-08-14 18:29
Permalink Submitted by JEFF BERKOWITZ on Fri, 2015-08-14 18:33
Is there any other waY?
Permalink Submitted by Alan - IRA critic on Fri, 2015-08-14 19:47
Need to know what type of plan the old plan is (eg a solo K?)
Permalink Submitted by JEFF BERKOWITZ on Sun, 2015-08-16 04:00
Alan- It’s a profit sharing plan. It has to pass certain discrimination tests; defined contribution plan
Permalink Submitted by Alan - IRA critic on Sun, 2015-08-16 16:02
You will have to distribute the assets and terminate this plan with the IRS. This IRS page indicates the timing parameters for these actions. You cannot keep the assets in the plan, so a rollover to your new employer plan is the only solution to avoiding an IRA rollover and pro rating of Roth conversions on Form 8606. Perhaps you will not have to roll the assets out of the PSP until 2016.
Permalink Submitted by JEFF BERKOWITZ on Sun, 2015-08-16 21:35
Absolutely!
Permalink Submitted by JEFF BERKOWITZ on Tue, 2015-08-18 03:05
Alan – When you said ” This IRS page indicates the timing parameters…”, please tell me exactly, specifically, what IRS section or code you refer to please. Today I was told by an administrator at TransAmerica Retirement Servives that ‘we have many clients who maintain their old dormant pension plan (and I did mention it’s a PSP) without rolling it over’, so I am confused again.
Permalink Submitted by Alan - IRA critic on Tue, 2015-08-18 04:23
Very sorry, I forgot to attach the link – here it is and seems to conflict with Transamerica: http://www.irs.gov/Retirement-Plans/Retirement-Plans-FAQs-regarding-Plan-Terminations