not another backdoor ROTH question!!!!

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whitecliff
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not another backdoor ROTH question!!!!

Post by whitecliff » Tue Feb 04, 2014 3:37 pm

I have posted about my situation a few times but need to make sure this is best way to go before I take the leap. I have a SEP-IRA and a solo 401k through vanguard. As most people know vanguard will not accept a rollover of a SEP into a solo 401k, but fidelity will. If I do this I will have to create a NEW solo 401k with fidelity and completely liquidate my SEP and buy fidelity funds. Then I would have to roll the fidelity solo 401k back into the vanguard solo 401k, which they will allow. Then open TIRA and convert to ROTH.

My question is has anyone taken this route? Am I allowed to have two solo 401k's with two different institutions formed from the same company? Is there a better way to do this? Any pitfalls or major fees such as early account closures I would face from fidelity? Thank you for any advice.

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tfb
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Re: not another backdoor ROTH question!!!!

Post by tfb » Tue Feb 04, 2014 3:51 pm

whitecliff wrote:Is there a better way to do this?

Just leave the solo 401k at Fidelity. It's better in the long run because you can buy Spartan Funds Advantage shares and ETFs at lower ERs than the Investor shares at Vanguard.
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whitecliff
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Re: not another backdoor ROTH question!!!!

Post by whitecliff » Tue Feb 04, 2014 3:58 pm

tfb wrote:
whitecliff wrote:Is there a better way to do this?

Just leave the solo 401k at Fidelity. It's better in the long run because you can buy Spartan Funds Advantage shares and ETFs at lower ERs than the Investor shares at Vanguard.


you mean roll both the SEP and solo 401k into a new solo 401k at fidelity? The problem is I am using the target retirement funds at vanguard which have an expense ratio of approximately 0.18% and fidelity's comparable funds expense ratio is 0.82% (these percentages may be a little off they are off top of my head). I know I could just as easily do a three index fund portfolio with 3 funds and rearrange each year but its a lot easier to buy one fund.

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tfb
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Re: not another backdoor ROTH question!!!!

Post by tfb » Tue Feb 04, 2014 4:03 pm

whitecliff wrote:you mean roll both the SEP and solo 401k into a new solo 401k at fidelity? ... I know I could just as easily do a three index fund portfolio with 3 funds and rearrange each year

Yes and do just that.
Harry Sit, taking a break from the forums.

whitecliff
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Re: not another backdoor ROTH question!!!!

Post by whitecliff » Tue Feb 04, 2014 5:07 pm

tfb wrote:
whitecliff wrote:you mean roll both the SEP and solo 401k into a new solo 401k at fidelity? ... I know I could just as easily do a three index fund portfolio with 3 funds and rearrange each year

Yes and do just that.


I would prefer to stay with vanguard and in a target date fund if possible. I am more asking about if I can have two solo 401ks with two different institutions from same company at same time and if anyone has done it this way before. Thank you for the advise though.

whitecliff
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Re: not another backdoor ROTH question!!!!

Post by whitecliff » Tue Feb 04, 2014 6:24 pm

Anybody else?

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LAlearning
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Re: not another backdoor ROTH question!!!!

Post by LAlearning » Tue Feb 04, 2014 6:28 pm

whitecliff wrote:
tfb wrote:
whitecliff wrote:you mean roll both the SEP and solo 401k into a new solo 401k at fidelity? ... I know I could just as easily do a three index fund portfolio with 3 funds and rearrange each year

Yes and do just that.


I would prefer to stay with vanguard and in a target date fund if possible. I am more asking about if I can have two solo 401ks with two different institutions from same company at same time and if anyone has done it this way before. Thank you for the advise though.


Of course you can. Just like you can have multiple 401k accounts. The IRS doesnt care where you put your 401k, just that you dont exceed the max.
As noted, you are making this harder on yourself. Leave it at Fidelity and do Spartan funds.
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whitecliff
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Re: not another backdoor ROTH question!!!!

Post by whitecliff » Tue Feb 04, 2014 7:34 pm

LAlearning wrote:
whitecliff wrote:
tfb wrote:
whitecliff wrote:you mean roll both the SEP and solo 401k into a new solo 401k at fidelity? ... I know I could just as easily do a three index fund portfolio with 3 funds and rearrange each year

Yes and do just that.


I would prefer to stay with vanguard and in a target date fund if possible. I am more asking about if I can have two solo 401ks with two different institutions from same company at same time and if anyone has done it this way before. Thank you for the advise though.


Of course you can. Just like you can have multiple 401k accounts. The IRS doesnt care where you put your 401k, just that you dont exceed the max.
As noted, you are making this harder on yourself. Leave it at Fidelity and do Spartan funds.


I understand it would be easier but prefer to keep my funds with vanguard because expense ratios are lower, performance generally better, and I like that it is shareholder owned.

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Re: not another backdoor ROTH question!!!!

Post by retiredjg » Tue Feb 04, 2014 8:09 pm

I don't know if you can have two active 401k accounts for the same business. But you can have one one followed by another. You might have to "move" to Fido for a year (or maybe just a few months?), leaving your current account open but not receiving contributions. And then move back to Vanguard after you've done the deed with your SEP IRA.

There is no reason to stay at Fido if you prefer Vanguard. Or vice versa, for that matter.

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