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If you ever switched jobs, you must have thought of rolling over your old 401(k) to an IRA (individual retirement account).
But is it possible to roll over your 401(k) without changing jobs? This is where in service rollover 401(k) comes in. But before you proceed with the same, you would want to consult a financial advisor in your field. A professional would be able to give you the best advice on how to save for retirement.
What is in-service rollover 401(k)?
An in-service rollover refers to the transfer of assets from your present employer’s 401(k) plan to an individual retirement account. Typically, a rollover is completed when you change jobs. But an in-service rollover allows you to move your money without leaving your job.
If you opt for an in-service rollover, you can withdraw your money from your current 401(k) and put it into an IRA without switching jobs. This option is suitable for people who want lower fees or more investment options.
Who can apply for an in-service 401(k) rollover?
Whether you can opt for an in-service 401(k) rollover or not depends entirely on your plan. That’s because not all plan providers offer the in-service rollover option. Also, the rules and conditions may vary from one plan provider to another.
Some plan providers may set special requirements for in-service rollover. So unless you meet the requirements, you can opt for an in-service rollover. In some cases, you are eligible only if you contributed to the plan for at least 5 years. Whereas other plans might allow you to opt for in-service rollover if you have been in the account for 2 years.
Regardless of everything else, you should first review your 401(k) document and then ask your plan provider to find out whether you are eligible or not.
Moving money from your current 401(k) into an IRA gives you flexibility and more control over your investments. Unlike 401(k), IRA’s allow investors to invest endlessly for buying exchange-traded funds, bonds, stocks, and mutual funds. Also, your IRA charges a lower fee than your 401(k). So it wouldn’t be wrong to say that opting for an in-service 401(k) rollover is beneficial in many ways.
