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401k question
Posted on 4/25/23 at 7:18 pm
Posted on 4/25/23 at 7:18 pm
I have a 401(k) from a prior job and just started a new job who offers a 401(k) through a different financial services company. Should I move the money from my 401(k) from the old company into my new?
All I own in the prior 401(k) is a bunch of retirement target mutual funds.
All I own in the prior 401(k) is a bunch of retirement target mutual funds.
This post was edited on 4/25/23 at 7:23 pm
6
Posted on 4/25/23 at 7:22 pm to Tornado Alley
Depends.
What options are available in new plan? Old plan? Fees?
What about rolling over to an IRA?
Lots of options.
What options are available in new plan? Old plan? Fees?
What about rolling over to an IRA?
Lots of options.
Posted on 4/25/23 at 7:27 pm to slackster
Not sure about the fees at either place. Will I’m research and update.
What would be the benefit of rolling it over into an IRA?
What would be the benefit of rolling it over into an IRA?
Posted on 4/25/23 at 7:29 pm to Tornado Alley
If the fees are low and investment options are good, sure. Otherwise, you can rollover to an IRA.
If you rollover, just be aware if you anticipate ever having income over the Roth IRA limit and want to do a backdoor Roth IRA having a traditional IRA is problematic due to pro rata rule.
If so, you can then rollover the traditional IRA back into a 401k if employer at that time allows it. Then backdoor Roth is available without additional tax consequences.
If you rollover, just be aware if you anticipate ever having income over the Roth IRA limit and want to do a backdoor Roth IRA having a traditional IRA is problematic due to pro rata rule.
If so, you can then rollover the traditional IRA back into a 401k if employer at that time allows it. Then backdoor Roth is available without additional tax consequences.
Posted on 4/25/23 at 7:32 pm to TorchtheFlyingTiger
Can I roll over even though my old 401k has been sitting there a year? I just became eligible at my new job.
Posted on 4/25/23 at 7:40 pm to Tornado Alley
quote:
Can I roll over even though my old 401k has been sitting there a year?
It’s your account. You can roll it over whenever you want. You can also let it sit there (not that I’m advising that!).
I was in a similar situation. I converted the old 401K to a Roth IRA (backdoor method mentioned above), then combined it with my current Roth IRA (2 separate transactions) so I can manage it all in one account.
This post was edited on 4/25/23 at 7:42 pm
Posted on 4/25/23 at 7:47 pm to skewbs
But wouldn’t you have to pay taxes for converting from a 401k to Roth?
Posted on 4/25/23 at 8:40 pm to Tornado Alley
I was in the exact same situation and came here for advice. I rolled mine into a Fidelity IRA so I could have more control over it. My previous company used Empower and my new company uses Vanguard. Both of those plans only allow you to invest in funds. With Fidelity, you can invest in most of the same funds they offered, but have far more options, including individual stocks. I am contributing into the Vanguard account now because of the company match, but I rolled everything with Empower to Fidelity.
Posted on 4/25/23 at 8:54 pm to Tornado Alley
quote:
But wouldn’t you have to pay taxes for converting from a 401k to Roth?
Yes. But all future growth and distributions would be tax free (as long as the rules are followed).
Posted on 4/25/23 at 10:59 pm to Tornado Alley
quote:
But wouldn’t you have to pay taxes for converting from a 401k to Roth?
Some people on here have different opinions, but outside of very limited situations, I wouldn’t convert anything in the even consider converting in the 32% tax bracket or higher, and the majority of folks shouldn’t convert in anything higher than the 12% bracket.
Posted on 4/26/23 at 7:49 am to adavis
quote:
I was in the exact same situation and came here for advice. I rolled mine into a Fidelity IRA so I could have more control over it. My previous company used Empower and my new company uses Vanguard. Both of those plans only allow you to invest in funds. With Fidelity, you can invest in most of the same funds they offered, but have far more options, including individual stocks. I am contributing into the Vanguard account now because of the company match, but I rolled everything with Empower to Fidelity.
I don't know much about the market and never planned to tinker in it and purchase individual stocks and the like. But I do like the idea of having some freedom to do what I want in case I change my mind.
Posted on 4/26/23 at 5:43 pm to Tornado Alley
Roll it over to Fidelity.
If/when you leave the new job, roll that one over to Fidelity also.
If/when you leave the new job, roll that one over to Fidelity also.
Posted on 4/26/23 at 6:49 pm to TorchtheFlyingTiger
quote:When I rolled over my wife’s 401(k) to Vanguard into an IRA, it went into a IRA rollover fund. We have a separate traditional IRA fund with Vanguard that we use to back door our Roth.
If you rollover, just be aware if you anticipate ever having income over the Roth IRA limit and want to do a backdoor Roth IRA having a traditional IRA is problematic due to pro rata rule. If so, you can then rollover the traditional IRA back into a 401k if employer at that time allows it. Then backdoor Roth is available without additional tax consequences.
Posted on 4/27/23 at 4:08 pm to Tornado Alley
Rollover to your own IRA at a low cost place like Vanguard, Fidelity, or Schwab. When you end your current job, roll that one too. You will have total control over your money with lower fees than any 401K charges.
Posted on 4/27/23 at 6:13 pm to Tornado Alley
Move the money to a Vanguard Rollover IRA
Posted on 4/28/23 at 10:12 am to slackster
This. OP should not listen to anyone without asking these questions.
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