Can I rollover my 401k from my ex-employer into the Individual 401k?

Yes. Provided you are eligible for an Individual 401k then you can rollover your 401k with a previous employer into an Individual 401k. In order to be able to rollover a 401k you must have terminated your employment. You are not permitted to rollover a 401k with a current employer.

An important feature of the Individual 401k plan is the opportunity to consolidate retirement assets. Most retirement accounts can be rolled over into an Individual 401k and if the rollover is done properly there is no tax liability. The easiest option is to do a direct rollover. With a direct rollover, you authorize your ex-employer’s administrator or current IRA custodian to make the check payable directly to the new custodian for benefit of (FBO) your name. For example, the check would be made payable to the new custodian FBO John Smith. This is sometimes referred to as a trustee-to-trustee transfer and there is no tax withholding, no taxes and no penalties with this option. Your retirement savings will continue to grow tax-deferred. In most situations, a direct rollover makes the most sense since it avoids potential tax liabilities and penalties.

What retirement accounts can be rolled over into an Individual 401k?

You can generally rollover any pre-tax retirement account into the Individual 401k. You can rollover your 401k, 403b, 457, or Thrift Saving Plan from a previous employer. You can transfer a Rollover IRA, Traditional IRA, SEP IRA, Simple IRA, Keogh and Defined Benefit Plan.

IRS rules do not permit a Roth IRA to be rolled over into the Individual Roth 401k, however you can rollover a Roth 401k into the Individual Roth 401k.

Consolidating retirement accounts is particularly important if you would like to use the Individual 401k loan provision. Other advantages of consolidating your retirement plans via a rollover into you Individual 401k are improved financial organization and ease of monitoring your retirement portfolio.

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Eric Kuniholm Eric Kuniholm, CPWA®
Certified Private Wealth Advisor®
Beacon Capital Management Advisors

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