Here's another common question on our website the last couple of months:

Q Can I take money from my 401k or employer plan at age 59 1/2 ( I'm still working) and move that money to an IRA? It's called a "in-service withdrawal" by most plans and there are several advantages.

A Many 401k plans don't allow you to move funds into an IRA until you've left the employer. Your plan may allow an "in-service" withdrawal that lets you move a portion or all of the funds after you've reached 59 1/2. This could be ideal, especially if you want to take advantage of funds or investments that are not available in your 401k. Many investors will roll their money into the IRA to take advantage of CD's, stocks or ETF's.

Call your 401k plan or 403b plan and ask if they allow this.  And, always consult with your financial advisor on this retirement strategy.

Forbes.com provides additional information:

The law permits this, but employers don't have to permit it. Still, 70% of companies--and 89% of those with 5,000 or more employees--allow these in-service withdrawals, the Profit Sharing/401k Council of America found in a 2006 survey of 1,000 firms. So do some public sector employers; the federal government, for example, allows older workers to withdraw funds, but only once.

One obvious reason to consider an in-service rollover is to escape a bum plan that has expensive or mediocre funds. Some small plans have annual fees on domestic equity mutual funds that top 2% a year.