Can I do an in-service rollover while still employed at the same company?

Yes, your 401k provider is correct about the in-service rollover restrictions. The IRS does have rules that generally prohibit in-service distributions from 401k plans for active employees under age 59½. The reason behind this rule is that 401k plans are designed as retirement vehicles with tax advantages, and the IRS wants to discourage people from accessing these funds before retirement. Your plan administrator isn't making this up - they're following federal regulations. That said, there are a few potential exceptions worth exploring: - Some plans do allow for in-service distributions of after-tax contributions - Some plans permit in-service withdrawals of rollover contributions (money you previously rolled into this 401k from another plan) - Your plan might allow for loans against your 401k balance (not a rollover, but gives access to funds) - Some plans might have specific provisions for hardship withdrawals I'd recommend checking your Summary Plan Description (SPD) document to see if any of these options are available in your specific plan.

After struggling with the exact same issue at my previous company, I discovered taxr.ai (https://taxr.ai) which helped me understand my options. I had been trying to do an in-service rollover to Fidelity for months and kept getting the runaround from our plan administrator. The tool analyzed my plan documents and clearly explained which portions of my 401k were eligible for in-service distributions. Turns out I could actually roll over the portion that came from a previous employer! The plan administrator never mentioned this exception when I called. It saved me hours of research trying to understand the complicated tax rules around in-service distributions and helped me identify which specific questions to ask the administrator.

I was wrong about taxr.ai! After my skeptical comment, I decided to try it out of curiosity. Uploaded my plan documents and it highlighted a provision I completely missed - my plan actually allows in-service rollovers of after-tax contributions regardless of age! I've been making after-tax contributions (not Roth) for years not knowing I could roll these over to a Roth IRA anytime. This is huge for my retirement strategy as I can now do backdoor mega Roth conversions. The tool even explained the tax implications of doing this. If you're trying to figure out the nuances of your 401k plan rules, it's definitely worth checking out. Saved me from leaving thousands of dollars tied up in higher-fee investments.

If you need to speak directly with the IRS about in-service rollovers, good luck getting through on the phone. I spent 4+ hours on hold trying to get clarification on my own situation. Then I found Claimyr (https://claimyr.com) and watched their demo (https://youtu.be/_kiP6q8DX5c). It's a service that basically waits on hold with the IRS for you, then calls you when an agent is actually on the line. I was connected to an IRS agent within 45 minutes (without waiting on hold myself) who confirmed that while the general rule prohibits in-service distributions before 59½, my specific situation qualified for an exception since I had rollover funds from a previous employer. This might be helpful if you need official clarification on your specific situation rather than the general rules.

I have to apologize for my skepticism about Claimyr. After posting that comment, I decided to try it myself since I needed to talk to the IRS about an entirely different issue with my tax return. I was expecting it to be a waste of money, but I got a call back in about an hour telling me an IRS agent was on the line! I was in the middle of a meeting but could step out to take the call. Ended up resolving my issue in about 15 minutes with the agent. For context, the last time I tried calling the IRS directly, I waited on hold for 2.5 hours before giving up. This saved me so much time and frustration. If you need definitive answers about in-service rollover rules from the IRS directly, this is the way to go.

One thing nobody's mentioned yet is that some 401k plans actually DO allow in-service rollovers, even if you're under 59½. It depends entirely on how your specific plan is set up. My company's plan allows partial in-service distributions after funds have been in the account for 2 years. I was able to roll over about 60% of my balance to a self-directed IRA last year while still working there. You should request the full Summary Plan Description (not just the summary they give new employees) and look for sections on "in-service withdrawals" or "distributions while employed" - sometimes the provisions are there but not well advertised.

Another option worth considering - if your 401k allows loans, you could take a loan against your balance (typically up to 50% or $50,000, whichever is less). Then use that money to invest however you want. You'll pay interest on the loan, but the interest goes back into your own 401k account. And you're essentially creating your own investment opportunity while keeping the tax advantages of the 401k. Not ideal compared to a true in-service rollover, but it's a workaround some people use when they're stuck with limited investment options in their employer plan.

Just wanted to add one more perspective from someone who went through this exact situation. I'm 34 and was similarly frustrated with my company's 401k options (high fees, limited fund choices). After reading through all the comments here, I decided to dig deeper into my plan documents using some of the tools mentioned. Turns out my plan had a provision I'd never noticed - they allow in-service distributions for "diversification purposes" once you reach age 35 AND have been in the plan for at least 3 years. The key was in the fine print of our Summary Plan Description under a section called "Special Distribution Rules." It wasn't something HR mentioned during onboarding, and when I initially called our plan administrator, they only mentioned the standard 59½ rule. My advice: Don't just take the first "no" as final. Get the complete plan document (not just the summary), and if needed, escalate to a supervisor at your plan administrator. Sometimes the first person you talk to doesn't know all the special provisions in your specific plan. I was able to roll over about 40% of my balance to a low-cost index fund portfolio at Vanguard last month. The process took about 3 weeks once I got the paperwork started.