Recently I read a post by Goofyhoofy on the TMF site about nondeductible contributions to your 401k (heck if I can find it-- stupid
search engine) and I am a bit concerned about its implications.
He said that your nondeductible contributions must be the first removed from your 401k and that you cannot roll over the nondeductible contributions into an IRA. Thus, if I make nondeductible contributions to my 401k this year, I will be left with two choices when I leave this job:
1) pull out the nondeductible contributions (just these, or the growth on them as well?), pay the tax and the fine and roll over the rest into an IRA, or
2) leave all of my money in the 401k until the time I retire.
Am I right that these are my only two choices? Can I pull the money out of my 401k at some point in the future after I have left this job but before retirement?
Currently, my 401k money is invested in an S&P 500 index fund (95%) and total market bond index fund (5%). My company matches some of my contributions with company stock, which I will be able to move to other funds after I leave the company.
I intend to leave the company some time in the next couple of years, so there will be quite a while between then and when I retire. I like my choices in the 401k fairly well at this time, but who knows when they will change, or I will change my preferences. Still, I'd like to sock away as much money as possible into tax-advantaged vehicles and I will reach the IRS limit later this year. So... how do I figure out what I should do? Any additional information I should collect from my benefits administrator? What should I consider? Which sounds best?