Financial Information
Does the United States Post Office Allow 401K rollover if not retired yet?
Question : Does the United States Post Office Allow 401K rollover if not retired yet?
I wanted to know if the Federal Government employees can rollover the 401 K before retirement?
Also it seems like getting the 401K money is always tough and hard to do without losing half of it..
401k rollover
Best answer:
Answer by financegal27
As far as I know federal employees don’t have 401k plans. Federal employees have 457 plans. The difference between a 457 plan and a 401k plan is that 457 plans is not subject to the 10% early withdrawal penalty, which allows participants to withdraw the money before their retirement, however the withdrawal would be subject to ordinary income taxes, while you may be able to roll it into an IRA plan most plans have some restrictions on when and how the requests are processed when there is no hardship involved.
Edit: I just checked, the information on the USPS plan is available online, they don’t have 457 plans they use 403b plans instead which are subject to the 10% early withdrawal penalty and ordinary income taxes. It also explicitly states that you can only rollover the money after you have been separated from service.
http://postalmag.com/images/fers.pdf
-
-
#2 written by lidlwig 1 year ago
they may allow an in service withdrawal to then rollover into an IRA or whatnot, just make sure its as a direct rollover so you don’t get dinged an immediate 20% off the top. Not all plans though do allow an in service withdrawal…its hit or miss. I’d contact your HR department or whoever administers the plan as they would know more about it. I’d also take a look at the investment options in the plan and whether any of those can possibly substatute for what you want to do with these funds.
i am assuming of course you are still working for the postal service, as if you are leaving the USPS to a different job at a different company, you can rollover the 403b into an IRA as you have left the company though not officially speaking retired
- Comment Feed for this Post
In every retirement plan (401K) there is something called a plan document. The plan document spells out what is and is not allowed. An employer is required to provide an employee the plan document upon request. The Federal Government’s retirement plan is called the Thrift Savings Plan (TSP). The TSP’s plan document does allow for an in-service withdrawal. This feature allows an active employee to move the balance of their TSP account to an IRA while still employed. The employee can continue to add to the TSP and there is no penalty or tax consequence for the move. If the employee is no longer employed they can move the entire account to an IRA at any time for any reason without penalty or tax issue. This connection needs to be careful because if this is done incorrectly it will trigger a 10% penalty and be taxed as ordinary income.
Hope this helps!