Rolling Over 401 K While Still Employed

Skip West
3 min readApr 3


Rolling over 401 k while still employed is a common way to continue saving for retirement, but there are many factors to consider. It’s best to work with a financial advisor to help you decide whether a rollover is the right choice for your situation.

When you change jobs, it can be difficult to decide whether you should roll over your 401 k while still employed. It depends on a number of factors, including whether the new job offers a 401 k, the annual fees and investment options. A 401(k) is a defined-contribution plan where employees contribute money through payroll deductions. In this plan, the contributions are tax deferred and earnings grow tax free until you take distributions in retirement.

Contributions to a traditional IRA are tax-deductible, while withdrawals from a Roth IRA are tax-free. This makes a rollover from a 401(k) to an IRA more attractive. But you should be careful about the taxes and penalties involved. You can consult with a financial advisor to ensure your tax situation is as tax-efficient as possible.

401(k) rollovers are typically completed in one of two ways: when a person changes jobs or when they retire. But there is another type of rollover option that may be overlooked: an in-service rollover, which allows a plan participant to move money from their employer’s 401(k) to an IRA without a job change.

Those who are seeking more investment options and lower fees may want to consider an in-service rollover, as it will give them greater flexibility to manage their investments. They can choose from a variety of mutual funds, ETFs, stock and bond options.

However, there are certain rules and conditions that may apply to in-service rollovers. Some plans might have strict requirements, such as a minimum age and number of years of service. Additionally, they may have different rules if you own company stock in your 401(k). You’ll need to consult with a financial advisor to learn more about these restrictions. You’ll also want to determine whether you have enough assets to make an in-service rollover work for you.

If you decide to roll over your 401 k while still employed, it can be a good idea to consult with a financial advisor. The decision should be based on a number of factors, including your current income tax situation and the amount of time before you plan to retire.

The main benefit of rolling over your 401 k while you’re still employed is the fact that it will not be subject to any taxes until you actually withdraw the money. However, if you don’t reach the age of 59 and a half at the time of withdrawal, you’ll be subject to a premature withdrawal penalty of 10%.

401 k accounts also offer a number of advantages, such as lower fees and cost-effective investment choices. Additionally, 401 k funds are protected against creditors in bankruptcy. While these benefits vary from state to state, they are an important consideration for investors who value financial security.

IRAs allow you to choose from a greater range of investment options. IRAs also allow you to make penalty-free withdrawals from your account. In addition, IRAs provide you with more control over your investments and beneficiary options. It is a good idea to work with a financial advisor to assess whether a rollover is right for you.

If you are rolling over a 401(k) while still employed, it is essential to understand how it is managed and the potential tax implications. It is also important to know how to deal with company stock if it is included in your 401(k). If you are considering the option of rolling over your 401 k while still employing, it is critical to take the time to learn about your options and how they will affect your retirement savings. This will ensure that you do not miss out on any benefits or make costly mistakes.



Skip West

Skip West was birthed in Greenville, South Carolina, but he relocated to Arkansas as an adult.