Education >> Retirement Planning

Question: Is there ever a good time to roll a 401(k) into an IRA while you're still with a company, or is that even possible?

Q: Is there ever a good time to roll a 401(k) into an IRA while you're still with a company, or is that even possible? I think my company is about to go belly up, and I'm worried about my retirement savings.

Ric: If you are over the age of 59½ and if your employer allows in-service distributions, then you can (and should) roll your 401(k) account into an IRA. But most employers do not allow it.

That doesn't mean you should worry about your 401(k) assets, however. Money in employer-sponsored retirement plans is (supposed to be) held separately from your employer's assets. Thus, if your employer goes broke, the money in your 401(k) remains safe.

If you are worried about your employer, contact the custodian of the 401(k) and verify that the money is, in fact, insulated from the employer and that no shenanigans are under way. That will give you some peace of mind.

One final point: If you really think your employer might go broke, start looking for another job now.

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