Most people think they have to leave their job before they can move money out of their 401(k) but that’s not always the case.
If you’re over age 59½ and still working, many retirement plans allow what’s called an in-service rollover. This little-known strategy lets you roll over some or all of your 401(k) funds into an IRA—without taxes or penalties—while continuing to contribute to your 401(k) at work.
Why consider an in-service rollover?
Here are a few key reasons it might make sense:
More Investment Options
Most workplace plans have a limited fund menu. IRAs offer a broader range of investments, including ETFs, bonds, and professionally managed strategies.
More Personalized Management
IRAs allow for customized portfolio design and risk management based on your retirement goals and time horizon—not a one-size-fits-all plan default.
Potential for Lower Costs
Depending on your 401(k) plan’s fee structure, an IRA may offer access to lower-cost funds or more holistic advice.
Better Coordination With Estate or Tax Planning
IRAs often integrate more cleanly with your broader wealth and estate planning, offering features like Qualified Charitable Distributions or Roth conversion flexibility.
Is there a catch?
Not every employer allows in-service rollovers, so the first step is checking your plan rules. And while an IRA may offer more flexibility, it also means taking responsibility for investment decisions—so having professional guidance becomes even more important.
While IRAs can offer lower fees, some investment choices or advisor fees could result in higher overall costs than your current 401(k) plan. In addition, in choosing an in service withdraw to an IRA, you would lose the 401(k) loan feature, limited creditor protection, and not be able to access the money prior to age 55 without proper planning.
Who is it right for?
An in-service rollover might make sense if you:
Are age 59½ or older
Want greater investment flexibility or professional management
Are planning for retirement in the next 5–10 years
Already have or are building a comprehensive retirement plan
Let’s talk
If you’re curious whether an in-service rollover fits into your strategy, we would be happy to review your options with you. It’s a powerful tool—but like any tool, it works best when it’s used at the right time and for the right reason.