401k rollover to IRA
A client is currently 51 which makes him under 59 1/2 and no longer working due to Total disability. Since he is no longer working at his former employer he would like to rollover his 401k to his IRA. However, when we called the institution they do show his former employer shows disability, but in order to proceed with rollover need a termination date. Client called his former employer and his employer mentions that they can not notify institution a terminated date b/c he will lose his total disability benefits . What is another option to rollover his 401k to avoid tax consequences? Process as a 60 day rollover?
Permalink Submitted by Alan - IRA critic on Wed, 2023-10-11 02:15
If this is an employer provided LT disability benefit lasting until retirement, the employer may have to treat the client as employed and as such the 401k may have to stay in place because the client has not separated from service. That would mean no rollover or even a distribution. Client will have to ask the employer if there is an age after which the 401k is eligible for distribution, and where this is documented. Best not to risk loss of this benefit.