Rollover to Solo 401k or tIRA?

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Topic Author
Captain_Andrew
Posts: 71
Joined: Tue Nov 25, 2014 10:16 am

Rollover to Solo 401k or tIRA?

Post by Captain_Andrew » Thu May 09, 2019 4:59 pm

Hello, long time no post.

I have a 401k with a previous employer and I'm unsure what's best to do with it. The funds they're aren't horrible, which is why I didn't do anything sooner, but the only decent low cost options are vanguard's s&p 500 index, small cap index, and total international index. There's a fair chance I could make too much in a few years to qualify for a Roth IRA so I want the option of a backdoor Roth available.

Should I deal with the hassle of setting up a Solo 401k now or roll it into an IRA and if I ever need the backdoor Roth then find a Solo 401k that will let me do an IRA rollover? (Where I work currently doesn't offer any funds with expense ratios under 50 basis points so I'd rather not roll it over into my current 401k.) (It would also simplify my asset allocation having everything at vanguard and I wouldn't do a Solo 401k at vanguard.)

fabdog
Posts: 497
Joined: Wed Jan 16, 2013 1:59 pm
Location: Williamsburg VA

Re: Rollover to Solo 401k or tIRA?

Post by fabdog » Thu May 09, 2019 5:06 pm

well, in order to have a Solo 401(k) you need a business that is producing income. You didn't mention a side business or 1099 income

You can't just create a Solo 401(K) as a vehicle to roll former plans into.

If you qualify and create one, make sure your custodian allows roll ins from other plans

Mike

retiredjg
Posts: 35979
Joined: Thu Jan 10, 2008 12:56 pm

Re: Rollover to Solo 401k or tIRA?

Post by retiredjg » Thu May 09, 2019 5:08 pm

If you want to preserve your ability to use the back door someday, your best option is to leave the money in the old 401k (since the new 401k has high costs).

lakpr
Posts: 1452
Joined: Fri Mar 18, 2011 9:59 am

Re: Rollover to Solo 401k or tIRA?

Post by lakpr » Thu May 09, 2019 5:12 pm

If there is even a smallish chance that you will need to do back door Roth, I will advise you to either leave the old 401k alone, or make sure your new 401k or Solo 401k will accept incoming funds from other qualified plans. Never roll it to a Rollover IRA and then find yourself locked out of both direct Roth and back door Roth.

Note that the Solo 401k plans at Vanguard are apparently not allowed to accept funds from other qualified plans. If you don’t have one already and thinking about creating one, and if you qualify, open with Fidelity of Schwab. I mention this because you said you want consolidate everything at one place, at Vanguard.

Topic Author
Captain_Andrew
Posts: 71
Joined: Tue Nov 25, 2014 10:16 am

Re: Rollover to Solo 401k or tIRA?

Post by Captain_Andrew » Thu May 09, 2019 5:30 pm

lakpr wrote:
Thu May 09, 2019 5:12 pm
I mention this because you said you want consolidate everything at one place, at Vanguard.
I was saying that's an advantage of rolling it into an IRA, that it could be at vanguard with my Roth IRA and my wife's tIRA that I manage. It would simplify managing my asset allocations.

I wouldn't do a Solo 401k at vanguard for to their distinct lack of fund choices. I was thinking Fidelity or TD Ameritrade.

lakpr
Posts: 1452
Joined: Fri Mar 18, 2011 9:59 am

Re: Rollover to Solo 401k or tIRA?

Post by lakpr » Thu May 09, 2019 5:34 pm

Captain_Andrew wrote:
Thu May 09, 2019 5:30 pm
lakpr wrote:
Thu May 09, 2019 5:12 pm
I mention this because you said you want consolidate everything at one place, at Vanguard.
I was saying that's an advantage of rolling it into an IRA, that it could be at vanguard with my Roth IRA and my wife's tIRA that I manage. It would simplify managing my asset allocations.

I wouldn't do a Solo 401k at vanguard for to their distinct lack of fund choices. I was thinking Fidelity or TD Ameritrade.
Got it. Your original post, especially the last paragraph, was a bit confusing. It starts off with the proposal to do a Solo 401k or IRA and consolidate at V, then ends with not wanting to do Solo 401k at V, sorry I misread

retiredjg
Posts: 35979
Joined: Thu Jan 10, 2008 12:56 pm

Re: Rollover to Solo 401k or tIRA?

Post by retiredjg » Thu May 09, 2019 5:40 pm

Captain_Andrew wrote:
Thu May 09, 2019 5:30 pm
lakpr wrote:
Thu May 09, 2019 5:12 pm
I mention this because you said you want consolidate everything at one place, at Vanguard.
I was saying that's an advantage of rolling it into an IRA, that it could be at vanguard with my Roth IRA and my wife's tIRA that I manage. It would simplify managing my asset allocations.

I wouldn't do a Solo 401k at vanguard for to their distinct lack of fund choices. I was thinking Fidelity or TD Ameritrade.
But you do not want to have anything in tIRA if you are considering using the back door in the future.

Topic Author
Captain_Andrew
Posts: 71
Joined: Tue Nov 25, 2014 10:16 am

Re: Rollover to Solo 401k or tIRA?

Post by Captain_Andrew » Wed May 15, 2019 12:04 pm

retiredjg wrote:
Thu May 09, 2019 5:40 pm
Captain_Andrew wrote:
Thu May 09, 2019 5:30 pm
lakpr wrote:
Thu May 09, 2019 5:12 pm
I mention this because you said you want consolidate everything at one place, at Vanguard.
I was saying that's an advantage of rolling it into an IRA, that it could be at vanguard with my Roth IRA and my wife's tIRA that I manage. It would simplify managing my asset allocations.

I wouldn't do a Solo 401k at vanguard for to their distinct lack of fund choices. I was thinking Fidelity or TD Ameritrade.
But you do not want to have anything in tIRA if you are considering using the back door in the future.
I'm aware of that and I thought I made that clear in my original post.

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