Seeking roll over advise

[MarieIG]

Does anyone know if there is any advantage to rolling an old 401(k) to a new employer's as opposed to a roll over IRA? My question is also in connection to making conversions of traditional IRAs into Roths at a future date. Will it help to keep the amount of the rollovers from prior jobs (which are totally pre-tax) down? Thanks for any help.

 

[Bigdawg]

if you roll over an old 401K to a new employer's 401K you will be able to access the combined 401K if you retire during or after January of the year you turn 55. If you roll it to an IRA then you can't touch it until 59.5.

 

[kaneohe]

Depending on your state, the 401K may have better creditor protection than the IRA. If you have after-tax contributions in your TIRA and you want to do conversions w/ minimal taxes (backdoor Roths), then it will help to have all your pretax funds in the 401K. If all the funds in the TIRA including the rollovers and prior contributions are pretax, then there is no advantage to rolling to the 401K. You will be taxed on the amount you convert regardless of how much there is in the TIRA.

 

[MarieIG]

Thank you Kaneohe, the traditional IRAs were initially funded with after tax money.

 

[kaneohe]

Depending on large those after tax contributions are and how much effort you want to spend............ here's some homework https://www.bogleheads.org/wiki/Backdoor_Roth_IRA
also be sure to read the link in the article at the top.

 

[euro]

For the sake of completeness it may be worth mentioning that, depending on your former employer, you might also be able to leave the old 401k with them (assuming you liked their investment options and fee structures).
Whatever you do though, make sure you don't end up co-mingling pre-tax and after-tax IRAs

 

[bingybear]

if you roll over an old 401K to a new employer's 401K you will be able to access the combined 401K if you retire during or after January of the year you turn 55. If you roll it to an IRA then you can't touch it until 59.5.

You may be able to take at 55 as noted... this depends of if the new employer plan supports this.

You can touch your IRA before 59.5 but will have a penalty to pay unless you set up a 72T.. substantially equal payments.

 

[pb4uski]

Another potential advantage is that many 401ks have stable value funds but you can't buy a stable value fund in your IRA.

 

[MRG]

Check your state laws. Your 401k is protected from lawsuits. An IRA may or may not depending on the state laws.

 

[Hermit]

The 401k is a long term commitment. Make sure you are satisfied with the way it is managed and the investment choices you have in the new account.

 

[MarieIG]

Thank you everyone. Just got home from work and I'm dozing off. I will re read in the am before work, including the link. My old 401(k) stinks, high fees, so that has been eliminated as an option.

 

[Koolau]

I you have any desire to eventually convert some of your money to Roths, this might be the time to set up the tIRAs to eventually convert. Just a thought, so YMMV.

 

[MarieIG]

Depending on large those after tax contributions are and how much effort you want to spend............ here's some homework https://www.bogleheads.org/wiki/Backdoor_Roth_IRA
also be sure to read the link in the article at the top.

Yes, that was info I was looking for. It seems that rolling the old 401(k) into the new would result in somewhat lower taxes when I do conversions later on. . .

 

[kaneohe]

Yes, that was info I was looking for. It seems that rolling the old 401(k) into the new would result in somewhat lower taxes when I do conversions later on. . .

If done properly and acceptable to new 401K, you would roll all your pre-tax funds ...not just the old 401K.........into the new401K. That would leave only after tax contributions so there should be 0 tax when you convert.