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caill430
LSU Fan
Da Dirty Dell
Member since Jul 2005
569 posts

Is there any benefit to rolling over 401 K with new company
Switching jobs and I have the option to roll over 401 K. Any real benefit to doing it?


TigerGrad2011
Member since Aug 2016
347 posts

re: Is there any benefit to rolling over 401 K with new company
Not sure, but you might be able to take a loan out based on that amount if you are so inclined, but as anyone will tell you, that's usually a bad idea.


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DonChowder
LSU Fan
Sonoma County
Member since Dec 2012
8950 posts

re: Is there any benefit to rolling over 401 K with new company
quote:

Any real benefit to doing it?
For me it depends on your ability to manage it. If you're moving into a plan where you have very little option on where to have your money then keep all the capital in the old account.


NYNolaguy1
LSU Fan
Member since May 2011
11672 posts

re: Is there any benefit to rolling over 401 K with new company
quote:

there any benefit to rolling over 401 K with new company


I have never seen a benefit, in fact most often fees are higher in 401k's than IRA's, not to mention sometimes you are limited in your fund selection.


NBR_Exile
LSU Fan
Houston
Member since Jul 2012
194 posts

re: Is there any benefit to rolling over 401 K with new company
quote:

I have never seen a benefit, in fact most often fees are higher in 401k's than IRA's, not to mention sometimes you are limited in your fund selection


These are legitimate reasons to roll the old 401k into an IRA. However, if you plan to do a back door Roth conversion, it will make it harder to do so if these untaxed funds are co-mingled with after tax contributions.
This post was edited on 10/3 at 4:22 pm


Wortivi22
Houston Astros Fan
Land of Mini Vans
Member since Dec 2007
772 posts

re: Is there any benefit to rolling over 401 K with new company
I am assuming that your old company's stock in your 401(k)??

If so, and if you want to keep that stock, check with your new company before rolling over. This happened to me 5 years ago and I could not keep the individual company stock that I had before. I had to sell and reinvest in the mutual funds they were offering after the rollover, and that was my only choice.

If that doesn't make a difference to you, the only benefit I would see to a rollover would be the ease of not having to track several different accounts.

I'm not an expert on this, only my personal experience, so I would defer to anyone else with more detailed knowledge.


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tigersnipen
LSU Fan
Member since Dec 2006
1781 posts
 Online 

re: Is there any benefit to rolling over 401 K with new company
quote:

However, if you plan to do a back door Roth conversion, it will make it harder to do so if these untaxed funds are co-mingled with after tax contributions.


This is the main reason. I only have a traditional IRA to backdoor into a Roth. If I rolled over my 401k into the traditional then taxes would become an issue.


Teddy Ruxpin
LSU Fan
Austin, TX
Member since Oct 2006
30029 posts
 Online 

re: Is there any benefit to rolling over 401 K with new company
Ya I need to make a decision on this myself. Go with the more options in IRA or keep the backdoor ROTH avenue open.

I'm not sure what I'll do.

My new 401k has domestic indexes so it's not the worst
This post was edited on 10/3 at 5:06 pm


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Sigma
Michigan State Fan
Fairhope, AL
Member since Dec 2005
3007 posts

re: Is there any benefit to rolling over 401 K with new company
I'm not crazy about the fees but the fund options for me are pretty good.

But the best part is the 401k loan option. I've used them in the past as a last resort for real estate. I only wish I could do repayment plans shorter than 1 yr.


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RJSambola
LSU Fan
Member since Jun 2012
146 posts
 Online 

re: Is there any benefit to rolling over 401 K with new company
Keep 2 seperate iras. One for rollovers and one for backdoor


gpburdell
Georgia Tech Fan
ATL
Member since Jun 2015
286 posts

re: Is there any benefit to rolling over 401 K with new company
quote:

Keep 2 seperate iras. One for rollovers and one for backdoor


Having a separate ira account for backdoor roth doesn't do anything. When you do a backdoor roth, you have to account for all of your iras and convert them all. It doesn't matter if the accounts are at different institutions. If you have any deductible iras (traditional, rollover, sep, etc) you'd have to pay taxes on it.

https://www.bogleheads.org/wiki/Backdoor_Roth_IRA


Teddy Ruxpin
LSU Fan
Austin, TX
Member since Oct 2006
30029 posts
 Online 

re: Is there any benefit to rolling over 401 K with new company
quote:

Keep 2 seperate iras. One for rollovers and one for backdoor


Second time I've seen this posted yet see no where online that says this avoids taxes.

Have a source link?
This post was edited on 10/3 at 6:46 pm


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Sigma
Michigan State Fan
Fairhope, AL
Member since Dec 2005
3007 posts

re: Is there any benefit to rolling over 401 K with new company
quote:

When you do a backdoor roth, you have to account for all of your iras
This post was edited on 10/3 at 7:11 pm


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RJSambola
LSU Fan
Member since Jun 2012
146 posts
 Online 

re: Is there any benefit to rolling over 401 K with new company
You say that you would have to pay taxes again on any post tax contributions then post a link explaining how it is prorated.

The reason to keep 2 is it makes it easier to roll one into an existing 401k to shield it from the backdoor


Sigma
Michigan State Fan
Fairhope, AL
Member since Dec 2005
3007 posts

re: Is there any benefit to rolling over 401 K with new company
quote:

The reason to keep 2 is it makes it easier to roll one into an existing 401k to shield it from the backdoor


You should've clarified your statement to say you better be holding only one when you do the backdoor. Unless I am totally missing something.


GREENHEAD22
LSU Fan
LafayettebywayofBush
Member since Nov 2009
11356 posts
 Online 

re: Is there any benefit to rolling over 401 K with new company
So I am in the same position as the OP. I bookmarked this thread awhile back but am still a little confused on some of the info in it. I am planning on leaving my old 401K in the companies program however will I now be susceptible to fees? Also the backdoor Roth deal, can I get a simplified clarification on this. I currently have a Roth that I am funding but this is likely (hopefully) the last year I will come in under the limit.

I dont have any of the company stock in the 401k, we had a DSPP and that is being converted to common and I will be putting it in my personal TD account.


tirebiter
LSU Fan
ATL
Member since Oct 2006
5758 posts

re: Is there any benefit to rolling over 401 K with new company
Assuming good investment choices and low costs a benefit to keeping with a former employer or rolling into a new 401k is that one can start taking withdrawals from the plan at 55 if desired with no penalty without having to do a 72t. You may also have much greater creditor protection in a 401k than an IRA, depends on state law. I'm agnostic, really would depend on the plan choices and cost to me.


GREENHEAD22
LSU Fan
LafayettebywayofBush
Member since Nov 2009
11356 posts
 Online 

re: Is there any benefit to rolling over 401 K with new company
How does a backdoor Roth work? I am assuming it is when you pull funds from a 401k to fund a Roth after you are already making past the limit?


jimbeam
USA Fan
University of LSU
Member since Oct 2011
45175 posts

re: Is there any benefit to rolling over 401 K with new company
Backdoor is only if you exceed the Roth limits


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Teddy Ruxpin
LSU Fan
Austin, TX
Member since Oct 2006
30029 posts
 Online 

re: Is there any benefit to rolling over 401 K with new company
quote:

How does a backdoor Roth work? I am assuming it is when you pull funds from a 401k to fund a Roth after you are already making past the limit?



Nope, let's say you make too much money and can't fund a ROTH(or file separarely which effectively kills it). There is a loophole where there is no income limit on Roth conversions. So what people do with a high income is fund a Traditional IRA and then immediately convert to a Roth to bypass the income limitations.

The issue with rolling over your 401k to an IRA is if in the future you plan to do a backdoor Roth, the funds already in your IRA become subject to tax when they regularly wouldn't once you execute the conversion to the Roth, hence why some people either keep their old 401k or rollover to their new one, so they keep their IRA "clean" for conversions to their Roth.



There is however, apparently something called a Mega backdoor roth that involves certain 401ks and their distribution rules concerning after tax contributions which let's you put in something like $35,000 into your Roth but it's an option in a minority of 401k plans

This post was edited on 10/10 at 6:56 pm


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