New job not eligible for 401k yet. Rollover help please?

Question

I just started a new job and I'm not eligible to contribute to 401k for a while and have an existing untouched one from old job. Can I roll this into a rollover IRA and still contribute my own money to it in the meanwhile and then roll it into 401k account once I become eligible at my new job? If not what options do I have to keep contributing since I will have 2 years before I can contribute via my new job?

Answer 1

earlier posters are NOT correct. Since the passage of EGTRRA you can do exactly as you asked. Rollover your old 401k into an IRA, contribute to it, and then roll it into your new 401k once you become eligible. However, you will have to be able to prove that the contributions are deductible and pre-tax (ie no ROTH contributions or non-deductible IRA contributions).

Also, if you just started your new job then the absolute longest that they can keep you out of a regular 401k is July 1 of 2008. Keep in mind too that if you were eligible to participate in a 401k at any time during the year then you may not be able to make a deductible contribution to an IRA. Thus, if you were eligible to contribute to a your old companies 401k on January 2 that would preclude you from contributing to an IRA for 2007. And, since you become eligible for your new company in July of 2008 you might be out of luck for an IRA next year too. All depends on your marital status and income level. Go to www.irs.gov to see IRA phaseout limits to see if they apply to you.

Answer 2

If your old 401K plan won't let you leave it in that plan until you become eligible for your new employer's 401K plan, then your option is to roll it into a rollover IRA. You can add money to that or to another IRA in the interim, then start putting money into your new employer's 401K plan when you're eligible. You won't be able to roll the rollover IRA into the new employer's 401K plan though, but you can keep the rollover IRA until you retire. You have a wide range of options for the IRA, so having your money in an IRA rather than in your new employer's 401K shouldn't hurt you any.

Answer 3

Yes, you can rollover your old 401k to Rollover IRA.

No, you can not contribute to Rollover IRA.

Other options are Traditional IRA/Roth IRA if you are eligible. For eligibility check:
http://www.theusefulinfo.com/finance/tradira.html
http://www.theusefulinfo.com/finance/roth.html

-Infoman
Not a legal advice.
http://www.theusefulinfo.com/finance/401k.html
http://www.theusefulinfo.com/finance/compareTR.html

Answer 4

The first poster is right. If you roll it over into an IRA and then contribute to it, you have lost your opportunity to roll it into a new plan. Keep the old one where it is until you're eligible to roll it into the new plan.

Answer 5

Not via a 401k if your company makes you ineligible for 2 years. You can use a Roth or regular IRA in the interim.

Answer 6

You can rollover the 401(k) into an IRA, but you won't be able to "co-mingle" other funds with it. That doesn't stop you opening it another IRA, though, and you can report contributions to it when you file your taxes.

Answer 7

Ok, simple questions get simple answers. You will be taxed based on your tax bracket and penalized 10% for the early withdrawal penalty. Also, there's a new law that permits the investment firm to open an IRA in your name and transfer your money into it if the account is over $1,000. So, this would probably happen to you if you didn't do anything, which isn't such a bad thing.

Answer 8

yes