Rollover 401k Options

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Topic Author
Broadway2018
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Joined: Sat May 13, 2017 3:34 pm

Rollover 401k Options

Post by Broadway2018 » Sun Jun 16, 2019 6:40 pm

I am leaving my current employer and wondering what the best option for my 401k would be? A lot of people talk about rolling over to an IRA. Would that be suitable and if so, what are the steps?

Situation
Traditional 401k with Vanguard - low fees
~$100k balance -
Income going up to $220k
Never invested in an IRA or backdoor prior but interested in doing so moving forward
Filing status is married starting this coming tax year

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Duckie
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Re: Rollover 401k Options

Post by Duckie » Sun Jun 16, 2019 7:07 pm

Broadway2018 wrote:I am leaving my current employer and wondering what the best option for my 401k would be?
Since the 401k has low fees and your income is going up to $220K you should leave the 401k where it is for now. If you roll it to an IRA you will be unable to use the backdoor Roth IRA method properly.

lakpr
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Re: Rollover 401k Options

Post by lakpr » Sun Jun 16, 2019 7:58 pm

+1 to Duckie. Since your income is more than $203k, the phase out limit for direct contribution to Roth IRA, you must need backdoor Roth maneuvers in the future. Therefore no Rollover IRA. Either leave the existing 401k as is, or if your current employer plan permits it and has good inexpensive choices, roll it into the current plan.

Topic Author
Broadway2018
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Joined: Sat May 13, 2017 3:34 pm

Re: Rollover 401k Options

Post by Broadway2018 » Sun Jun 16, 2019 8:10 pm

Thank you both! Separate question: If in my 401k plan $20k is Roth, does that matter for the backdoor ira?

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Duckie
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Re: Rollover 401k Options

Post by Duckie » Sun Jun 16, 2019 8:53 pm

Broadway2018 wrote:If in my 401k plan $20k is Roth, does that matter for the backdoor ira?
No. Having money in a Roth 401k has no effect on your Roth IRA or the backdoor method.

JBTX
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Re: Rollover 401k Options

Post by JBTX » Sun Jun 16, 2019 9:19 pm

Agree with Duckie. Leave it where it is. Also 401ks generally have better asset protection than IRAS in bankruptcy / lawsuits, etc.

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747driver
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Re: Rollover 401k Options

Post by 747driver » Mon Jun 17, 2019 9:54 am

It's only assumed so far, but your new employer doesn't have a 401(k)? If it does, and it's on par with your Vanguard account as far as funds and fees, just roll it over to your new 401(k) to keep your finances simpler.

IF you don't have a new employer 401(k), then I agree with the others to leave it in your old plan.

Cheers.
A clear conscience is a great pillow.

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