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401k rollover question
I had a thought about 401k rollovers, but I've not been able to find any information on this -- maybe because it's not possible or just flat-out stupid!
Let's say you've got a 401k with matching employer contributions. You contribute, they contribute, month after month. In the meantime, you've already got a traditional IRA set up. You're eligible to contribute up to $4000 annually to your IRA -- except that you don't because you're already contributing to your 401k and you can't afford to contribute to both.
Once your 401k reaches $4000, could you then roll it over to your traditional IRA -- and then start all over again with your 401k, reach the next $4000 and do another rollover, and so on?
It might involve a little elbow grease, but this seems like it's the best of both worlds. As the years pass, the bulk of your retirement funds will be in one or more IRAs that YOU control (since 401ks limit what funds you can invest in, etc), while at the same time you continue to benefit from employer contributions (ie, free money).
The thing is, the only time you ever really hear about people rolling over their 401k is when they leave the job where they got the 401k. I've never heard of someone repeatedly rolling over their 401k balances to IRAs when they're still in the job, as I've described above. Is this because it can't be done that way? Or is it because people don't want to (or think to) bother with it?
~ Jenney
Let's say you've got a 401k with matching employer contributions. You contribute, they contribute, month after month. In the meantime, you've already got a traditional IRA set up. You're eligible to contribute up to $4000 annually to your IRA -- except that you don't because you're already contributing to your 401k and you can't afford to contribute to both.
Once your 401k reaches $4000, could you then roll it over to your traditional IRA -- and then start all over again with your 401k, reach the next $4000 and do another rollover, and so on?
It might involve a little elbow grease, but this seems like it's the best of both worlds. As the years pass, the bulk of your retirement funds will be in one or more IRAs that YOU control (since 401ks limit what funds you can invest in, etc), while at the same time you continue to benefit from employer contributions (ie, free money).
The thing is, the only time you ever really hear about people rolling over their 401k is when they leave the job where they got the 401k. I've never heard of someone repeatedly rolling over their 401k balances to IRAs when they're still in the job, as I've described above. Is this because it can't be done that way? Or is it because people don't want to (or think to) bother with it?
~ Jenney
Thanks for the quick responses!
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