401k advice

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Nahum
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Joined: Tue Nov 29, 2011 1:33 pm
Location: New York

401k advice

Post by Nahum »

Greetings,

I have a 401k account with Fidelity but I was laid off in June. I am employed again but my employer does not have a 401k program. What do I do with my old 401k account? Move it to a traditional IRA? I don't really know how long I will stay in this job. I like it because no one day is the same and I am learning a lot.

stats
home: NYC
old Fidelity 401k - about $74k
Roth IRA Vanguard- $14k

Thank you for all your help!
PFInterest
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Re: 401k advice

Post by PFInterest »

Just leave it there.
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Nahum
Posts: 122
Joined: Tue Nov 29, 2011 1:33 pm
Location: New York

Re: 401k advice

Post by Nahum »

I guess I have to open a traditional IRA and contribute there instead?
Crisium
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Re: 401k advice

Post by Crisium »

Nahum wrote: Fri Sep 29, 2017 1:36 pm I guess I have to open a traditional IRA and contribute there instead?
If you want to continue to tax defer for retirement, sure.

Just remember T-IRA and Roth IRA share the same single year contribution limit of $5,500 ($6,500 if age 50).
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TomatoTomahto
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Re: 401k advice

Post by TomatoTomahto »

I made the mistake of moving my 401k to an IRA many years ago. Stupid move for me, as it precludes my contributing to a backdoor Roth IRA. If I knew then what I know now . . .

ETA: I did not say “backdoor” in my initial post, in error.
Last edited by TomatoTomahto on Fri Sep 29, 2017 4:15 pm, edited 1 time in total.
I get the FI part but not the RE part of FIRE.
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ruralavalon
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Re: 401k advice

Post by ruralavalon »

Nahum wrote: Thu Sep 28, 2017 7:48 pm Greetings,

I have a 401k account with Fidelity but I was laid off in June. I am employed again but my employer does not have a 401k program. What do I do with my old 401k account? Move it to a traditional IRA? I don't really know how long I will stay in this job. I like it because no one day is the same and I am learning a lot.

stats
home: NYC
old Fidelity 401k - about $74k
Roth IRA Vanguard- $14k

Thank you for all your help!
Since you new employer does not offer a 401k there are two basic choices.
1) Leave it where it is if the funds offered are good with low expense ratios, and there is little or no account maintenance fee charged.
2) Roll it over to a traditional IRA at a low cost provider like Vanguard.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started
soccerrules
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Re: 401k advice

Post by soccerrules »

TomatoTomahto wrote: Fri Sep 29, 2017 2:00 pm I made the mistake of moving my 401k to an IRA many years ago. Stupid move for me, as it precludes my contributing to a Roth IRA. If I knew then what I know now . . .
is this true ?
I was under the impression that commingling of 401K rollover monies and traditional IRA contributions impacted the Backdoor Roth option because of potential for large tax implications in a given year(s). I was not aware that having a rollover IRA impacted your ability to contribute to a separate Roth IRA. I thought contributions to Roth IRA's were only limited by Income and/or IRA yearly limits (Roth and Trad combined= $5,500 , <50 and $6,500 >50)

Please correct my thinking.
Don't let your outflow exceed your income or your upkeep will be your downfall.
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TomatoTomahto
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Re: 401k advice

Post by TomatoTomahto »

soccerrules wrote: Fri Sep 29, 2017 4:08 pm
TomatoTomahto wrote: Fri Sep 29, 2017 2:00 pm I made the mistake of moving my 401k to an IRA many years ago. Stupid move for me, as it precludes my contributing to a Roth IRA. If I knew then what I know now . . .
is this true ?
I was under the impression that commingling of 401K rollover monies and traditional IRA contributions impacted the Backdoor Roth option because of potential for large tax implications in a given year(s). I was not aware that having a rollover IRA impacted your ability to contribute to a separate Roth IRA. I thought contributions to Roth IRA's were only limited by Income and/or IRA yearly limits (Roth and Trad combined= $5,500 , <50 and $6,500 >50)

Please correct my thinking.
Nothing to correct, I just forgot to say backdoor. I will fix it above. Apologies.
I get the FI part but not the RE part of FIRE.
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badbreath
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Re: 401k advice

Post by badbreath »

Just leave it where it is. When and if you get a new job with a 401k roll it into your new 401k fund (if it has good funds)
“While money can’t buy happiness, it certainly lets you choose your own form of misery.” Groucho Marx
soccerrules
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Re: 401k advice

Post by soccerrules »

TomatoTomahto wrote: Fri Sep 29, 2017 4:13 pm
soccerrules wrote: Fri Sep 29, 2017 4:08 pm
TomatoTomahto wrote: Fri Sep 29, 2017 2:00 pm I made the mistake of moving my 401k to an IRA many years ago. Stupid move for me, as it precludes my contributing to a Roth IRA. If I knew then what I know now . . .
is this true ?
I was under the impression that commingling of 401K rollover monies and traditional IRA contributions impacted the Backdoor Roth option because of potential for large tax implications in a given year(s). I was not aware that having a rollover IRA impacted your ability to contribute to a separate Roth IRA. I thought contributions to Roth IRA's were only limited by Income and/or IRA yearly limits (Roth and Trad combined= $5,500 , <50 and $6,500 >50)

Please correct my thinking.
Nothing to correct, I just forgot to say backdoor. I will fix it above. Apologies.
No worries. The only reason I asked is this might be our only year to contribute to Roth IRA's because of MFJ Income limits in prior years and probably future years.
Oh and I am in the same boat with you on the 401k rollover IRA - Backdoor Roth complications.
Don't let your outflow exceed your income or your upkeep will be your downfall.
Billionaire
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Re: 401k advice

Post by Billionaire »

Let me start off by saying, I've never done a backdoor ROTH IRA contribution and have no plans to ever do one. I have done a couple of 401K to IRA rollovers. So my question is....if I did do a backdoor ROTH IRA, would it trigger a potential large tax liability due to the rollovers I've done?

( I was going to suggest to the OP to consolidate his accounts, but it sounds like that's not the general consensus.)
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TomatoTomahto
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Re: 401k advice

Post by TomatoTomahto »

Billionaire wrote: Sat Sep 30, 2017 9:45 am Let me start off by saying, I've never done a backdoor ROTH IRA contribution and have no plans to ever do one. I have done a couple of 401K to IRA rollovers. So my question is....if I did do a backdoor ROTH IRA, would it trigger a potential large tax liability due to the rollovers I've done?

( I was going to suggest to the OP to consolidate his accounts, but it sounds like that's not the general consensus.)
Usually, in your situation, if you wanted to do a backdoor Roth, you would move your tIRA into an active 401k that accepts rollins. I think that most of us, given the "potential large tax liability," avoid doing backdoor Roths when we have large tIRA balances that we can't move into a 401k. There is nothing to keep us from doing it, legally, but ...

So, IRL, don't do a backdoor Roth unless you're up for the arithmetic to figure out what portion is taxable and paying. IMO, not worth it. IMO, it is very much worth it if you don't have a tIRA getting in the way (which is my wife's situation; we rolled her tIRA into her active 401k).
I get the FI part but not the RE part of FIRE.
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