401k Rollover to Traditional IRA and returning to work for same company
Client retiring and wants to roll over his 401K to traditional IRA.
He then wants to return to work for the same company on a part time basis.
He has been told that according to IRS rules that he can not go back to work
for the same company on a part time basis for 6 months. I have not been able to find this rule.
Is anyone able to confirm this rule?
Permalink Submitted by Alan - IRA critic on Thu, 2019-08-15 22:09
Am not aware of an IRS rule. However, there might be a plan rule regarding how “separation from service” is defined. For example, elective deferrals are not eligible for in service distributions prior to 59.5, so a plan might want to discourage separation and re hire shortly thereafter for the primary purpose of moving their 401k balance out of the plan. Plan reps sometimes describe a plan rule as an IRS rule when it is not. Why doesn’t the client just transition directly to part time, or if client needs the 6 months off why not leave the 401k balance in place?