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Rollover IRA

Posted: Fri Oct 06, 2017 1:16 pm
by dskillz1
Is it advisable to keep investments in a Rollover IRA? I would only be able to do non-deductible contributions as my income is past the limit. I currently have over 100K invested (with Vanguards VFORX target date fund 2040) in said Rollover IRA and planned to just keep it there until retirement without ever adding to it. I was able to escape a bad 401k plan and do an in-service rollover a few years back.

Re: Rollover IRA

Posted: Fri Oct 06, 2017 1:27 pm
by dskillz1
Retirement being about 20 years from now..

Re: Rollover IRA

Posted: Fri Oct 06, 2017 2:18 pm
by Earl Lemongrab
What options do you have? Is there a current employer plan that would accept the rollover IRA? If so, are the offerings in it good? If not, then there really isn't any advice to give. Whether you add to the account or not is really irrelevant other than sometimes that would prevent rollovers to a company plan.

Re: Rollover IRA

Posted: Fri Oct 06, 2017 3:16 pm
by dskillz1
I have all the options an IRA provide, I can basically invest in anything. Im just trying to figure out if leaving over 100K in a rollover IRA invested in the VFORX fund without ever touching it for 20 years is advisable? Are there any tax issues to consider?

Re: Rollover IRA

Posted: Fri Oct 06, 2017 4:15 pm
by soccerrules
does that fund match your AA ?
does the glide path of the fund over the next 20 years match your desired AA ?
if yes, then leave it.
if no, leave it until the AA in the Fund is off by X % (5%?) of your desired AA and then switch to the 2035 or 2045.

you could the target fund and construct your own portfolio to match your AA and then make contributions appropriately to keep your AA.

Re: Rollover IRA

Posted: Fri Oct 06, 2017 4:33 pm
by retiredjg
dskillz1 wrote:
Fri Oct 06, 2017 1:16 pm
Is it advisable to keep investments in a Rollover IRA?
As opposed to what? What other options are you considering?

Your first and second posts seem to be asking different questions.

Yes, it is fine to keep your Rollover IRA as is, invested a fund that suits your tastes for many years.

Whether you add non-deductible contributions to any IRA is a different question. Whether you add non-deductible contributions to a different IRA is a different question. Whether the fund you currently have is the right one is a different question.

Tell us more. Just what is on your mind? What has triggered posting this question at this time?

Re: Rollover IRA

Posted: Fri Oct 06, 2017 5:24 pm
by JW-Retired
dskillz1 wrote:
Fri Oct 06, 2017 1:16 pm
Is it advisable to keep investments in a Rollover IRA? I would only be able to do non-deductible contributions as my income is past the limit.
..............................................
I'm just trying to figure out if leaving over 100K in a rollover IRA invested in the VFORX fund without ever touching it for 20 years is advisable? Are there any tax issues to consider?
Maybe tax issues, it depends.

Are you or will you ever be also over the limit for contributing to a Roth IRA? If so, there would be "tax issues" then with owning any sort of non-Roth IRA. If you have any such IRA, it will mess up the "BackdoorRoth" maneuver. This allows you to put money in a Roth even if you are over the limit, but you would not want to use it if you already have a $100k rollover IRA. The IRS considers all your IRAs (Rollover IRA, tIRA, Sep IRA, SIMPLE IRA) in total when taxes are calculated.

One way to get around this is to hide your IRA money in your 401k, if you have one and they will take it.
See: https://www.bogleheads.org/wiki/Backdoor_Roth_IRA
JW

Re: Rollover IRA

Posted: Fri Oct 06, 2017 11:44 pm
by Earl Lemongrab
By options I wasn't referring to investment choices. I meant options on what to do with the account. Are you at the MAGI level where you can't contribute to a Roth directly? If so, then the Rollover IRA is preventing you from Backdoor Roth and rolling this into a qualified plan is something to consider.