IRS Regulations

• The IRS allows you to move qualified assets such as a 401k, 403b and IRA from one qualified plan to another. You can move the assets out of the employer plan or into the employer plan based on the IRS regulations. Regulations only allow you to roll over assets once per 12-month period. If you are doing a direct rollover, the money will be sent from the IRA custodian to the 401k administrator. Indirect rollovers send you a check that must be deposited. Be careful of indirect rollovers as the IRS requires 20 percent federal tax withholding; to prevent a distribution with taxes and penalties, 100 percent of the IRA must be re-deposited into the 401k.
  
  

Administrative Allowance

• While the IRS approves of a roll into a 401k plan, it does not require every custodian to allow it. You will need to check with your new employer's 401k plan administrator to see if it is permitted in the plan adoption agreement. If it is, you can obtain the required paperwork directly from the 401k plan administrator to proceed with the rollover.
  
  

Pros

• The benefits of rolling IRA funds into an employer-sponsored 401k plan include convenience and cost. For many, it is simpler to manage one account rather than an IRA and a 401k. Having one account reduces the risk of forgetting about a retirement account which can happen after relocating and changing addresses. Additionally, 401k plans are less expensive to the plan participant compared to an IRA account in many cases. Because the 401k administrates accounts for an entire company, there is often a break on fees per account. Transferring the assets into the 401k plan also allows you to access loan funds -- up to $50,000 capped at 50 percent of the 401k value.
  
  

Cons

• Moving your IRA assets into a 401k plan limits the investment options available to you. Different IRA custodians offer different investment options, including bank savings, stocks, bonds and mutual funds. There are also real estate and gold IRAs where you can place assets. Most 401k plans offer a limited number of mutual fund options and perhaps company stock. With everything in the 401k, you accept less flexibility in investment options.