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For more than 60 years, through all kinds of market conditions, Fidelity has been helping people like you pursue their financial goals. Ken Hevert and Sarah Walsh, who lead our Ask Fidelity team, have spent decades helping investors understand retirement strategies. They can help put Fidelity’s expertise to work for you.
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Any salary deferrals must be contributed as soon as they can be reasonably separated from the other assets of the business.
Any employer contributions must be made by the employer’s tax filing deadline including any extensions, generally April 15.
If you have additional questions, please visit https://www.fidelity.com/retirement-ira/small-business/self-employed-401k/overview.
Thanks so much for this opportunity to help you!
An in-service withdrawal from a workplace plan, like a 401(k), is one that occurs while you are still employed by the sponsor of the plan. If allowed by your plan, an in-service withdrawal can be a valuable tool in retirement planning. As you approach retirement, you may be looking for specific types of investments that may not be offered in your plan options. An in-service withdrawal would allow you to move money from the plan into another account that offers the features or choices you’re seeking.
Keep in mind that withdrawals of pre-tax contributions will be taxed as ordinary income and are subject to an early withdrawal penalty of 10%. If the in-service withdrawal is rolled into an IRA, however, generally the tax-deferred status is maintained.
Most plans have different rules when it comes to in-service withdrawals so please call your plan’s toll-free service center phone line to discuss your situation with a plan specialist. We also suggest consulting with a tax advisor prior to taking a withdrawal that may have tax implications.
1. Keep it in the plan.
2. Roll it over to an IRA.
3. Move it to a new employer’s plan.
4. Take a cash distribution.
For someone not actually leaving employment, but instead taking a leave of absence, the options may be a little different—the funds might have to stay in the account.
Even if you are separating from your current employer, leaving your money in the plan could be a good option for your situation. This will allow the money to remain invested and working to help you meet your retirement goals with the potential for tax-deferred growth. If you’re not going to have access to your account or won’t have the time to check on your account during your year of missionary work, you might consider selecting an investment option that doesn’t require much tracking, like a target retirement date fund. These funds invest in a diversified asset allocation that tends to be more aggressive when the target date is many years away, automatically becoming more conservative over time.
I suggest you call your plan’s toll-free service center phone line and discuss your situation with a representative who is familiar with your plan’s rules and investment choices.
Thanks, and good luck with your missionary work.
You can also call a retirement representative at 800-544-6666 who would be happy to answer any of your questions.
You are correct about the deadline for taking your 2015 MRD. For the first MRD only, you can delay the withdrawal until April 1, 2016, but then you will need to take two MRDs in 2016 – one for 2015 and one for 2016. Your 2016 MRD deadline is December 31, 2016. There is another reason not to delay your first MRD until April 1 of the following year. The 2016 MRD would be calculated based on the year-end account balance from the previous year. This would include the 2015 amount in the account since you didn’t take it, which would make your 2016 MRD a higher amount.
As far as when the withdrawals can be made, you may take your MRD monthly, quarterly, or on whatever schedule you like, as long as the full amount is distributed by the deadline. If you would like to have your MRDs withdrawn automatically, you can enroll online at Fidelity.com/RDC or with a retirement representative by calling 800-544-4774. You can find more information about automatic withdrawals here: https://www.fidelity.com/cash-manag...
I hope this helps.