withdrawals from 401k

L1: withdrawals from 401kHi Can you take SEPP withdrawals from a 401k plan or do you need to roll it over to an IRA? I would like to still work part time for my corporation but be able to supplement with SEPP withdrawals. Can I legally roll over my 401k plan to an IRA while still working for the same employer? Thanks for any help 2006-08-25 09:44, By: bigman, IP: [72.207.13.26]
L2: withdrawals from 401kHello, Bigman:
The answer to all of your questions is, “It depends of what the 401(k) plan document allows you to do.”
Yes, the K-plan can be part of your SEPP universe, but if you ar not allowed to make “in-service”and “periodic”withdrawals, it is a moot point. Yes you can “legally” rollover the K-plan to an IRA while still working, but this goes back to what”s allowed by the plan document. Some allow “in-service” withdrawls and some don”t.
Take your questions to your HR department and ask. They probably won”t know so ask for a copy of the plan document so you can read it yourself and probably get some help from a qualified advisor.
Jim2006-08-25 09:54, By: Jim, IP: [70.184.2.72]

L2: withdrawals from 401kYou did not indicate your age. This is critical for appropriate advice.
Are youunder 55, will be 55, over 59 1/2 ?
Remember that once you reach the year in which you are or will become 55, you can make regular withdrawals from 401-K without 10% penalty, so long as you “separate from service”. You might have to decide between the 10% penalty, SEPP plan, or continuing to work for, or be an independent contractor to, your employer.
QUERY TO THE GURUS — What is the technical definition of “separated from service? ” (i.e. How do they treat the situation if someone “retires”, and then is an independent consultant to that same employer? What if he incorporates, and the corporation is providing the service ?2006-08-25 11:58, By: dlztaxes, IP: [4.175.9.35]

L2: withdrawals from 401kHello dlz:
The “separation of service” issue can sometimes be a tricky one. Usually, some one wants to separate from service in order to access their retirement assets in whatever 401-424 plan they might have because “in-service” access/withdrawals are either prohibited ro severely restricted.
The easy solution is to quit and then enter into a new “contractor” relationship with your previous employer; either individually, or, even better as a corporation or LLC/LLP. Any of these structures work as long as the ex-employee recevies a 1099M and not a W-2.
The problem, which may arise is when the employee terminates and then is re-hired as an employee; potentially even worse, into essentially the same job or function as previous. Did a separation fo service occur? Alot depends on intent of both parties as well as time. Easily,a one year separation is adequate, but any time less than that starts to become suspect. Therefore, I would counsel that people contemplating a post-separation relationship with their previous employer simply avoid the employer/employee structure and use the contractor relationship.
TheBadger
wjstecker@wispertel.net

2006-08-27 08:29, By: TheBadger, IP: [72.42.66.127]