In Service Distributions Under 59 1/2
Hello everyone,
I have recently come across an organization (FMO) that is promoting in-service distributions for anyone under 59 1/2. They are saying that you can in fact move 401(k)’s or 403(b)’s to an IRA while the person is still in service or working even under the age of 59 1/2.
The two things they told me is that it has to be an ERISA retirement plan and it has to be a married couple? Is there any legitimacy to ISDs to IRA’s under 59 1/2? There must be something in the fine print?
If so, how can it be done??
Thanks!
Sean
Permalink Submitted by Alan - IRA critic on Fri, 2016-06-03 19:07
Some plans may allow ISD under 59.5 of specific portions of the plan, such as after tax contributions, matching contributions, or earnings. However, the employee deferrals can never be rolled out before 59.5 if still employed.
Permalink Submitted by Sean Hughes on Sat, 2016-06-04 01:34
Well that is not what a very large FMO is promoting.
Permalink Submitted by Alan - IRA critic on Sat, 2016-06-04 04:25
More specifics would help. What or who is FMO? If a plan document or IRS Regulations do not authorize ISDs in certain cases, the funds will not be distributed out of a qualified plan.