The One Secret Your Benefits Department Never Told You About Your 401(k)

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The One Secret Your Benefits Department Never Told You About Your 401(k)


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January 31, 2015

What if we were to tell you that you could get access to part of your 401(k) today and NOT pay a single penalty to move your funds into an IRA account?  You would think that we were kidding, right?  Unfortunately, most Time Warner employees (CNN, Cartoon Network, Turner, TBS, TNT, etc.) are unaware of a little known rule in your summary plan description of your 401(k) called an “in-service distribution”.

Time Warner permits an in-service distribution which would allow you to withdrawal some of your money from the 401k and roll it over to an IRA while you are still employed with the company!  YES, this is 100% TRUE.  Call Fidelity yourself and find out!  By rolling over the assets to an IRA, you can maintain control of how you manage your money.

Let’s face it- – some 401k’s are deficient with high fees, limited investment fund choices, and your ability to customize an investment process within your 401k is restricted. Here are three reasons you should consider an in-service distribution:

  1. The ability to increase your investment choices. The investment fund options provided by TimeWarner are limited to a handful of mutual funds, while an IRA would permit you to invest in an array of investments such as stocks, bonds, ETF’s, mutual funds and much more!
  2. Control and Flexibility. Many investors have an interest in having more control over investment selection, containing cost, and other decisions.
  3. Protection with risk mitigation. While it can be exciting to watch investments go up, there is usually very little downside protection available with mutual funds. With the market being close to all-time highs, how important is it for you to be able to protect what you have?

Fidelity will be able to tell you specifically which plan assets are eligible for these withdrawals, but as a general rule the following contributions are available:

  1. Time Warner contributions
  2. Your personal after-tax contribution
  3. Your pre-tax contributions (if you are at least 59 ½)

How do in-service distributions integrate with your financial plan?

In-service distributions integrate with your financial plan because in-service distributions are permitted by the Time Warner 401k plan in order to allow you to rollover assets to an IRA which could offer more investment choices, improved beneficiary options, and the ability to add downside protection on your money.

Written by: Ted Jenkin
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