Financial Planning for Generation X & Y Women
 
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Expert Q&A Archive

03/11/2009
Rolling funds from a new Roth IRA to an old Roth IRA
Can I roll over funds from a new Roth 401(k) that I've only had for a short amount of time into a Roth IRA and then go back to contributing to a traditional 401(k) through my employer? (The employer offers both Roth 401(k) and traditional 401(k) options.)
Lynn Anne Gillen, CIMA® :
expert info »
You can stop contributing to a Roth 401(k), leave the funds inside the account, then start adding money into the traditional 401(k).
Rosemary Ervin, CPA:
expert info »
If the employer allows you to roll out of the Roth (assuming you are under 59 1/2 and not separated from the employer, they may not allow it), then you can. Most employer plans will not allow a distribution while you are still employed or under 59 1/2. So check with the employer. Be certain to roll to a Roth IRA.
Joan Koonce, Ph.D:
expert info »
As employer plans differ, it is important to check with your employer for specific rules regarding what can be done with different retirement plans; however, typically funds in a Roth 401(k) can be rolled over into another employer's Roth 401(k) or a Roth IRA, but not a traditional 401(k). Distributions from one Roth 401(k) to another must be done through a direct rollover. Special rules apply if it is not a direct rollover. If the distribution from the Roth 401(k) is made directly to the employee and rolled over within 60 days, the portion of the distribution that are contributions cannot be rolled over into another Roth 401(k), but can be rolled over into a Roth IRA.
Alyssa Rakovich:
expert info »
The employer offers both Roth 401(k) and traditional 401(k) options.) Only if the plan document with the employer allows for it. Usually the only time you can roll over is if you meet a required event like separation from service.
Editor's Note:
Editor’s Note: See the publication What You Should Know About Your Retirement Plan from the Website of the Employee Benefits Security Administration at www.dol.gov/ebsa/publications/wyskapr.html and Tax Topic 413 – Rollovers from Retirement Plans – on the Internal Revenue Service Website at www.irs.gov/taxtopics/tc413.html.