Workers 59½ Can Roll 401(k) Funds to IRAs Penalty-Free While Still Employed
Updated
Updated · Yahoo Finance · Aug 22
Workers 59½ Can Roll 401(k) Funds to IRAs Penalty-Free While Still Employed
3 articles · Updated · Yahoo Finance · Aug 22
Summary
Age 59½ lets many workers move part or all of a 401(k) into a traditional or Roth IRA without quitting, while continuing payroll deferrals and employer-match contributions.
The shift becomes possible because the IRS no longer treats distributions after 59½ as premature, removing the 10% early-withdrawal penalty if the employer plan permits in-service distributions.
IRAs can open access to investments often missing from 401(k) menus, including individual stocks, ETFs and Treasuries yielding 4.69%.
Plan rules still control access, and the rollover carries trade-offs: moving company stock into an IRA wipes out Net Unrealized Appreciation tax treatment and can weaken federal creditor protections.