Combining traditional and rollover IRAs?

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4ransom
Posts: 82
Joined: Mon Jul 30, 2007 3:27 pm

Combining traditional and rollover IRAs?

Post by 4ransom » Tue Jan 14, 2020 2:01 pm

Can I combine different years of Vanguard accounts in traditional and Roth accounts-assuming all in the same fund?

123
Posts: 5430
Joined: Fri Oct 12, 2012 3:55 pm

Re: Combining traditional and rollover IRAs?

Post by 123 » Tue Jan 14, 2020 2:16 pm

Multiple traditional IRA accounts can be consolidated into a single traditional IRA account and multiple Roth IRA accounts can be consolidated into a single Roth IRA account but you may not combine traditional and Roth accounts since the tax rules are different. It is possible to CONVERT funds held in a traditional IRA account to a Roth IRA but that requires payment of taxes on the conversion.
The closest helping hand is at the end of your own arm.

Jablean
Posts: 460
Joined: Sat Jun 02, 2018 2:38 pm

Re: Combining traditional and rollover IRAs?

Post by Jablean » Tue Jan 14, 2020 2:44 pm

Also you say in your title that you have rollover IRAs. Unless you are of retirement age the suggestion is to not combine a rollover IRA (ie one you rolled from a 401k to IRA upon leaving employment) with a traditional IRA that you created yourself. Or to add new yearly contributions to the rollover IRA.

The reason for this is to keep the rollover IRA available to reintegrate with a future employer's 401k which isn't allowed if you have combined it with traditional funds.

Irenaeus
Posts: 30
Joined: Wed Sep 21, 2011 2:06 pm

Re: Combining traditional and rollover IRAs?

Post by Irenaeus » Tue Jan 14, 2020 5:49 pm

Jablean wrote:
Tue Jan 14, 2020 2:44 pm
Also you say in your title that you have rollover IRAs. Unless you are of retirement age the suggestion is to not combine a rollover IRA (ie one you rolled from a 401k to IRA upon leaving employment) with a traditional IRA that you created yourself. Or to add new yearly contributions to the rollover IRA.

The reason for this is to keep the rollover IRA available to reintegrate with a future employer's 401k which isn't allowed if you have combined it with traditional funds.
Why, Jablean, might it be desirable to integrate the funds from a past employer’s 401k with a future employer’s?

seymore92
Posts: 91
Joined: Sun Nov 27, 2016 9:16 am

Re: Combining traditional and rollover IRAs?

Post by seymore92 » Tue Jan 14, 2020 5:52 pm

Irenaeus wrote:
Tue Jan 14, 2020 5:49 pm
Jablean wrote:
Tue Jan 14, 2020 2:44 pm
Also you say in your title that you have rollover IRAs. Unless you are of retirement age the suggestion is to not combine a rollover IRA (ie one you rolled from a 401k to IRA upon leaving employment) with a traditional IRA that you created yourself. Or to add new yearly contributions to the rollover IRA.

The reason for this is to keep the rollover IRA available to reintegrate with a future employer's 401k which isn't allowed if you have combined it with traditional funds.
Why, Jablean, might it be desirable to integrate the funds from a past employer’s 401k with a future employer’s?
By moving the IRA to a 401k it’s possible to empty the IRA allowing for Backdoor Roth IRA in the future without such a large IRA balance increasing the taxable amount of the Roth conversion.

Irenaeus
Posts: 30
Joined: Wed Sep 21, 2011 2:06 pm

Re: Combining traditional and rollover IRAs?

Post by Irenaeus » Wed Jan 15, 2020 11:56 pm

seymore92 wrote:
Tue Jan 14, 2020 5:52 pm
Irenaeus wrote:
Tue Jan 14, 2020 5:49 pm
Jablean wrote:
Tue Jan 14, 2020 2:44 pm
Also you say in your title that you have rollover IRAs. Unless you are of retirement age the suggestion is to not combine a rollover IRA (ie one you rolled from a 401k to IRA upon leaving employment) with a traditional IRA that you created yourself. Or to add new yearly contributions to the rollover IRA.

The reason for this is to keep the rollover IRA available to reintegrate with a future employer's 401k which isn't allowed if you have combined it with traditional funds.
Why, Jablean, might it be desirable to integrate the funds from a past employer’s 401k with a future employer’s?
By moving the IRA to a 401k it’s possible to empty the IRA allowing for Backdoor Roth IRA in the future without such a large IRA balance increasing the taxable amount of the Roth conversion.
Got it. Thank you.

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