Expert: Allen - 12/19/2011

Question
I had a solo computer consulting business (no other employees) from 1996-2008, and had a Fidelity 401k with Money Purchase and Profit Sharing. I closed that business in 2008 when I partnered with another person on a new venture, which we are currently running and that has a Fidelity 401k with profit sharing. When I recently contacted Fidelity about closing the original 401k and moving the funds to a rollover IRA I have at Fidelity, they indicated that I may not be able to do this because of my current 401k with the new business. Are the two not completely separate entities? What are my options here? Leave funds where they are? rollover to IRA? or roll into new firms 401k plan? Any place I can get more info on how to handle this? Thanks...

Answer
I believe you definitely can move the money from the old plan to an IRA if the two businesses have separate federal identification numbers and are not what is known as a controlled group. The businesses are not a controlled group if you owned 100% of the old business and less than 80% of the new business.

Even if the businesses are a controlled group, you should be able to move the money if you closed out the old business and new business has a new federal identification number.

If Fidelity still resists, you can compromise by moving the money from the old plan into the new plan.