401K roll over question- Severance

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SCbound
Posts: 6
Joined: Mon Sep 09, 2019 11:13 am

401K roll over question- Severance

Post by SCbound »

My wife took a severance package and has since regained employment. She has a 401K plan with her previous employer and a cash balance plan. Below are the details regarding the cash balance plan.

http://www3.prudential.com/signature/Ca ... an%20.html

She would like to roll over the cash balance plan into her 401K with her prior employer and then roll over the 401K into her new employers 401K. The new 401K has very good funds with low expense ratios. We do not want to roll over to a tira, because we do back door roth conversions.

I've been researching this and I reading that only roll over is permitted per year. Based upon what I outlined above, would it be permitted to roll over the cash balance plan first or not?

We have 60 days to complete the roll over based upon a letter we received from the prior employer.

Below is the link from the IRS regarding roll overs

https://www.irs.gov/retirement-plans/pl ... tributions

Thank.you in advance. Any advice is appreciated.
MrJedi
Posts: 3540
Joined: Wed May 06, 2020 11:42 am

Re: 401K roll over question- Severance

Post by MrJedi »

Only one indirect rollover from an IRA to another IRA per year. If it's a direct rollover or is not IRA to IRA, there is no limit. At the very least it does not appear you are doing an IRA to IRA rollover in either case.
Lionel Hutz
Posts: 379
Joined: Sat Jan 30, 2021 12:18 pm

Re: 401K roll over question- Severance

Post by Lionel Hutz »

MrJedi covers the rollover question - not a problem as long as you make it a "direct rollover".

Practically, it's possible your old 401k does not permit a rollover of the cash balance plan into the old 401k. If so, simply roll both accounts to the new 401k as separate transactions: old 401k to new 401k, old cash balance to new 401k.
Topic Author
SCbound
Posts: 6
Joined: Mon Sep 09, 2019 11:13 am

Re: 401K roll over question- Severance

Post by SCbound »

Thank you for your responses.
placeholder
Posts: 8421
Joined: Tue Aug 06, 2013 12:43 pm

Re: 401K roll over question- Severance

Post by placeholder »

Just having a non ira involved anywhere removes the one rollover problem whether direct or indirect.
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