Author Topic: 401k when downshifting  (Read 344 times)

Steeze

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401k when downshifting
« on: February 01, 2023, 08:23:49 AM »
Not sure if this is more of a tax / accounting question, but here goes;

I am planning on going part time later this year, dropping from ~ 50 hrs/wk to around 8-12 hrs/wk. I would remain a W-2 employee for professional liability insurance reasons.

My hope is that this will make me ineligible for the 401K and I will be able to then roll it over to an IRA. Our plan has very high fees (approx. 2% for index / target date funds) and I have around $200k in there. Our plan does not allow in-service roll overs. I am going to reach out to the admin of the plan (VOYA) to see what I would have to do to roll it into an IRA while still employed, if I can pay some sort of fee or something to have this done.

At the time I go part time I will have worked 8 years full time and ~ 700 hrs in 2023 and will likely work another 100-300 hrs in 2023. Maybe 200-600 hours in 2024. Any idea if this would make me ineligible? Do I need to stay under 1000hrs a year or 500 hrs a year? Currently all of the part time guys are 1099, so I am not sure how it is handled.

Experience? Insight? Advice?

ixtap

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Re: 401k when downshifting
« Reply #1 on: February 01, 2023, 09:15:29 AM »
It depends on the plan rules.

It is pretty rare to have access to a 401k under 20 hours, but I would not assume that this means you are no longer in service. You might be landing in the twilight zone where you can't contribute, but because you are still an employee you also can't do a rollover.