A 401(k) in-plan Roth conversion (also called an 'in-plan Roth rollover') allows Farmers Insurance Group employees to transfer the non-Roth portion of your 401(k) account into a designated Roth account within the same plan. The amount that Farmers Insurance Group employees convert is subject to federal income tax in the year of the conversion (except for any nontaxable basis you have in the amount transferred), but qualified distributions from the Roth account in the future are entirely income tax-free. The 10% early distribution penalty doesn't apply to amounts you convert (but that tax may be reclaimed by the IRS if you take a non-qualified distribution from your Roth account within five years of the conversion).
What part of my account can I convert?
Assuming your Farmers Insurance Group 401(k) allows in-plan conversions (plans aren't required to), you can convert any vested part of your 401(k) plan account into a designated Roth account regardless of whether you're otherwise eligible for a plan distribution.
Keep in mind that if you're entitled to an eligible rollover distribution, you can always roll those dollars into a Roth IRA instead of using an in-plan conversion.
What else do I need to know?
If you have the choice of an in-plan conversion or a rollover to a Roth IRA, which should you choose? There are a number of factors to consider:
- In general, the investments available in an employer 401(k) plan are fairly limited, while virtually and type of investment is available in an IRA (on the other hand, your 401(k) plan may offer investments that you can't replicate in an IRA, or that aren't available at similar cost).
- An IRA may give you more flexibility with distributions. Your distribution options in a 401(k) plan depend on the terms of that particular plan, and your options may be limited.
- Finally, 401(k) plans typically enjoy more protection from creditors under federal law than do IRAs (consult a professional if creditor protection is important to you).
Caution: When evaluating whether to initiate a rollover from an employer plan to an IRA, always be sure to (1) ask about possible surrender charges that may be imposed by your employer plan, or new surrender charges that your IRA may impose, (2) compare investment fees and expenses charged by your IRA (and investment funds) with those charged by your employer plan (if any), and (3) understand any accumulated rights or guarantees that you may be giving up by transferring funds out of your employer plan.
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What is the 401(k) plan offered by Farmers Insurance Group?
The 401(k) plan at Farmers Insurance Group is a retirement savings plan that allows employees to save a portion of their paycheck before taxes are taken out.
How does Farmers Insurance Group match employee contributions to the 401(k) plan?
Farmers Insurance Group offers a matching contribution to the 401(k) plan, which typically matches a percentage of the employee's contributions, up to a certain limit.
What are the eligibility requirements for the 401(k) plan at Farmers Insurance Group?
Employees of Farmers Insurance Group are generally eligible to participate in the 401(k) plan after completing a certain period of employment, usually within the first year.
Can employees of Farmers Insurance Group make changes to their 401(k) contributions?
Yes, employees of Farmers Insurance Group can change their contribution amounts at any time, subject to certain plan rules.
What investment options are available in the Farmers Insurance Group 401(k) plan?
The Farmers Insurance Group 401(k) plan offers a variety of investment options, including mutual funds, stocks, and bonds, allowing employees to tailor their investment strategy.
Is there a vesting schedule for the employer match in the Farmers Insurance Group 401(k) plan?
Yes, the Farmers Insurance Group 401(k) plan has a vesting schedule that determines how much of the employer match employees can keep if they leave the company.
How can employees at Farmers Insurance Group access their 401(k) account information?
Employees can access their 401(k) account information through the Farmers Insurance Group employee portal or by contacting the plan administrator.
What happens to the 401(k) savings if an employee leaves Farmers Insurance Group?
If an employee leaves Farmers Insurance Group, they can roll over their 401(k) savings into another retirement account, withdraw the funds, or leave the savings in the Farmers Insurance Group plan if allowed.
Can employees of Farmers Insurance Group take loans against their 401(k) savings?
Yes, the Farmers Insurance Group 401(k) plan may allow employees to take loans against their savings, subject to specific terms and conditions.
Are there penalties for withdrawing funds from the Farmers Insurance Group 401(k) plan before retirement age?
Yes, early withdrawals from the Farmers Insurance Group 401(k) plan may incur penalties and taxes unless certain exceptions apply.