Retirement Planning/401K and still working


QUESTION: Hello.  I am 74, still employed and contribute into a Fidelity 401K plan.  Recently my company changed owners and will continue their own 401K plan thru Fidelity. I see on my Fidelity site that I now have two 401K accounts, one with the old owner, and the new owner.  Should I roll over the funds from my old employer's account into the new owner's account with Fidelity, and if so, how do I do this without penalties?  Or can I leave the funds in the old account while I'm still working and just start contributing into the new owners account?  When I do retire at age 75, and begin taking the RMD from Fidelity, do I have to roll over the 401 into a traditional IRA, or can I just leave the funds as is in the 401 and begin the RMD? I do not want to be penalized whatever I do.   I do take a RMD from an IRA I have with Met Life.  Thank you got your advice,  Ellen

ANSWER: Dear Ellen,

Isn't great to be 74 and still young enough to be working.

I look at changes of employer, whether by choice or circumstance, to be opportunities to retrieve 401(k) funds from a hostile environment. As long as the funds remain in a 401(k) the depositer is isolated from them, and he or she has no direct control over the account value.

However, your situation is unique, since you are past the RMD threshhold. So, what I recommend is my opinion, not a requirement. I believe that it is in your best interest to do a direct institution-to-institution transfer into an IRA of your choosing. I never recommend rolling the older 401(k) into the new employer's 401(k).

There is no Federal penalty for this action. Nor whould there be immediate income tax on the transfer. However, you would have to include this IRA along with your Met IRA when calculating your RMD. The good news is that you do not have to withdraw from these accounts proportionally to determine the income taxes. You may take a distribution totally out of whichever IRA you feel is the less productive or more risky.

Willard R. Brumbaugh, LUTCF
CA License 374776
(888) 792-2379

---------- FOLLOW-UP ----------

QUESTION: Hello.  Would I do a direct Fidelity to Fidelity transfer now, putting the original 401K from old employer into an IRA while I am still employed, or wait until I stop work?   Since my company has new owners, I am not familiar w/who's doing what w/the employee 401Ks.  Is it best to contact Fidelity personally if I want to make any changes?  Thank you!

Dear Ellen,

Before you move your old 401(k), you should determine your level of risk tolerance. Are you willing to keep your funds at a high risk level in hopes of a higher rate of growth? Or do you prefer certainty of account value? Or do you fit somewhere in between?

Once you have made that determination, you need to find someone you can trust to assist you in transferring the funds into the appropriate financial vehicle. S/He can provide the proper forms to Fidelity to accomplish your wishes.

If you want information on products available, you can contact me directly at or (888) 792-2379. I am not a Registered Rep, so I cannot advise about particular FINRA accounts. But I can provide information you may want about the alternatives.

Willard R. Brumbaugh, LUTCF
CA License 0374776

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Willard R. Brumbaugh, LUTCF


I have answered many questions regarding 401ks, IRAs and annuities as well as life insurance. I have been counselling against most Qualified Plans since 1994.


Ranked in the top 5 in retirement catagories at most of its last 2 1/2 years. Organizations I belong to: National Association of Insurance and Financial Advisors-California
Inland Empire Estate Planning Council

Life Underwriters Training Council Fellow

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