Old job 401k rollover - what to do with employer contributions?

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cookymonster
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Old job 401k rollover - what to do with employer contributions?

Post by cookymonster » Thu Nov 14, 2019 12:27 pm

I apologize in advance if this has been covered previously. I searched previous threads and did not see if this has been cleared up.

I left my old job about 45 days ago and am setting up non-prototype accounts at Fidelity for my individual 401k. I have a 401k and 403b at my old employer. I was an HCE, and the 401k was for my contributions up to the match, and the rest of my employee contributions went into the 403b.

In my Fidelity account, I have planned to set up separate accounts for pre-tax employee deferral as well as a plan for profit-sharing (employer contributions), in addition to plans for Roth and after-tax contributions, which will not be used for this rollover.

I understand that if I roll the money over to my individual 401k, I will not want to touch it before 59.5. I am aware of the 55 rule and would rather give this up than leave the money in there, where it is subject to the plan's fees.

Here is my question: Do the vested contributions from my old employer have different distribution rules than my (employee) contributions? If so, would there be any advantage gained from requesting a split rollover (i.e. sending the employer match to my profit sharing plan)?

I haven't been able to find any evidence that employer contributions (either from myself in my own plan or rollovers from another plan) have different distribution rules so I'm thinking I will just put the entire rollover in one account. But I posted here to see if there is something I am missing.

Thanks in advance!

fabdog
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Re: Old job 401k rollover - what to do with employer contributions?

Post by fabdog » Thu Nov 14, 2019 12:58 pm

I haven't been able to find any evidence that employer contributions (either from myself in my own plan or rollovers from another plan) have different distribution rules so I'm thinking I will just put the entire rollover in one account. But I posted here to see if there is something I am missing.
Your assessment is correct. It's all deferred money so just roll it into one account, no need for separate accounts. If it's in your former employer's stock, that may open a door to a different strategy, but you didn't mention that

Mike

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cookymonster
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Re: Old job 401k rollover - what to do with employer contributions?

Post by cookymonster » Thu Nov 14, 2019 1:31 pm

fabdog wrote:
Thu Nov 14, 2019 12:58 pm
I haven't been able to find any evidence that employer contributions (either from myself in my own plan or rollovers from another plan) have different distribution rules so I'm thinking I will just put the entire rollover in one account. But I posted here to see if there is something I am missing.
Your assessment is correct. It's all deferred money so just roll it into one account, no need for separate accounts. If it's in your former employer's stock, that may open a door to a different strategy, but you didn't mention that

Mike
Correct. It is just Vanguard mutual funds. Thank you for your reply.

optimismhelps
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Re: Old job 401k rollover - what to do with employer contributions?

Post by optimismhelps » Thu Nov 14, 2019 7:43 pm

fabdog wrote:
Thu Nov 14, 2019 12:58 pm
I haven't been able to find any evidence that employer contributions (either from myself in my own plan or rollovers from another plan) have different distribution rules so I'm thinking I will just put the entire rollover in one account. But I posted here to see if there is something I am missing.
Your assessment is correct. It's all deferred money so just roll it into one account, no need for separate accounts. If it's in your former employer's stock, that may open a door to a different strategy, but you didn't mention that

Mike
If it's in your former employer's stock, that may open a door to a different strategy, but you didn't mention that

@fabdog. Just curious, how would that change things?

fabdog
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Location: Williamsburg VA

Re: Old job 401k rollover - what to do with employer contributions?

Post by fabdog » Thu Nov 14, 2019 7:53 pm

If it's in your former employer's stock, that may open a door to a different strategy, but you didn't mention that

@fabdog. Just curious, how would that change things?
You could take advantage of NUA (Net unrealized appreciation). this is available only on company stock in the 401K. If you take it out instead of rolling over, you owe income tax on the amount used to buy the stock, but pay capital gains on any appreciation, which may be a good tax savings, depending on age, tax brackets, etc

more details here

https://www.investopedia.com/investing/ ... any-stock/

Mike

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