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by on February 8, 2012 Leave a Comment

Rollovers from Traditional IRAs to 401Ks – Is It Permissible?

I occasionally receive questions from individuals who are still mired down from old advice they were given many moons ago by their accountant. The advice said that Traditional IRAs (e.g., “pre-taxed” IRA accounts) cannot be moved in to a 401K plan…..self-directed or not. Well, the simple answer to the question is that, generally speaking, YES, such plans can be transferred/rolled over into the new 401k plan.

As a matter of note, please be advised that ROTH IRA funds cannot be brought into a 401K plan. But, once we get past the Roth conversation, most other funds from other qualified retirement plans can, generally speaking, be transferred/rolled over into the 401K plan.

However, two very specific plans cannot be transferred/rolled over into a 401K plan. These plans would be:

Inherited IRAs

Roth IRAs

So, this leads to the next question….which of the following plans can be transferred into a 401K plan?

Traditional IRA YES

Simple IRA YES — after two years

SEP IRA YES

457 (government) YES

“Pre-Tax” Qualified Plan* YES

403(b) Plan YES

Designated Roth Account NO
(401K or 403B)

* Qualfied Plans, for example, include Profit Share, 401K, Money Purchase Plans, Defined Benefit Plans.

In the next post, we will examine the pro’s and con’s of a SEP IRA (Self-Employed Pension) compared to a 401K plan. I think you will find that the 401K MAY just be your better option if you are self-employed (without employees).

This blog post is not legal advice. Individuals should seek advice based on their particular circumstances from their own counsel. Nothing in this blog post is intended as tax, legal, financial or investment advice. Moral of the story is to always seek guidance from professionals in those fields.

Related posts:

  1. Self-Directed IRAs and 401Ks – Accounting For Contributions
  2. Self-Directed IRAs and 401Ks – Don’t Trip Over the Crack
  3. “I Have To Do a Self-Directed IRA . . . Cuz I Gotta”
  4. Self-Directed IRAs and 401Ks – Watch the Fees!
  5. Self-Directed IRAs & 401Ks – It’s as Easy as 1 – 2 – 3 to Invest In Real Estate
Filed Under: 401(k)'s & IRA's
About John Park

John Park is a facilitator for self-directed IRAs and 401Ks and founder of PGI Agency, Inc. which is host to PGI SelfDirected. Prior to that, John maintained his own insurance agency and also worked in intercollegiate athletics (Arizona State University, Big Ten Conference Office). For over 6 years, PGI has established both self-directed IRA and 401K accounts so that individuals can take control of their retirement assets and invest in both Traditional and Non-Traditional (e.g., real estate) assets. John believes that most people should fully explore having FULL control of their retirement funds and be the steward of their own money.

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