when rolling over ira to 401k, do you try to track how the old funds grew?

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boglechu
Posts: 148
Joined: Sat Jan 30, 2016 2:19 am

when rolling over ira to 401k, do you try to track how the old funds grew?

Post by boglechu »

I have 30k that I'm rolling over from my ira to my 401k so I can do backdoor IRA. I thought of putting it in S&P 500 but I already have funds in that and there would be no way for me to keep track how it grows.

What about putting it in VG Growth and Income Adml? If my future contributions don't include VG Growth and income, I'll know how it does in a few years.

Or just forget about it and move it all to S&P?

thx

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Topic Author
boglechu
Posts: 148
Joined: Sat Jan 30, 2016 2:19 am

Re: when rolling over ira to 401k, do you try to track how the old funds grew?

Post by boglechu »

also, how does IRS keep track of the capital gains?

I worked for previous employer for 6 years and had accumulated about $25k. Then rolled it to VG. Vanguard increased in value by about 5k. Once I roll it again to my 401k, how will IRS now what capital gains to charge me when I pull in out in 30 years?
brandonyoung
Posts: 2
Joined: Mon Nov 09, 2015 11:29 pm

Re: when rolling over ira to 401k, do you try to track how the old funds grew?

Post by brandonyoung »

boglechu wrote: Tue Dec 12, 2017 10:34 pm also, how does IRS keep track of the capital gains?

I worked for previous employer for 6 years and had accumulated about $25k. Then rolled it to VG. Vanguard increased in value by about 5k. Once I roll it again to my 401k, how will IRS now what capital gains to charge me when I pull in out in 30 years?
The IRS doesn't care about cost-basis in retirement accounts. Capital gains taxes only applies to taxable accounts. IRAs and 401(k)s are taxed at ordinary income rates when you withdraw. In Roth IRA and Roth 401(k), you withdraw the money tax-free.
gostars
Posts: 439
Joined: Mon Oct 09, 2017 7:53 pm

Re: when rolling over ira to 401k, do you try to track how the old funds grew?

Post by gostars »

Unless there's more to the story, I think you might be confused. If you only accumulated 25k over 6 years, then it's quite likely that all of the money you will be rolling from the IRA to 401k is pre-tax. When you withdraw it, you will pay standard income tax on everything. Capital gains does not apply. So, put the money wherever it makes sense for your AA and based on the fee structure. If you want more advice on fund selection, you should provide more information, like your current holdings and what percent of your total portfolio they comprise, your desired AA, and tickers and ERs for the funds available in your 401k. See Asking Portfolio Questions for a template. And be wary of the expense ratios and fees any time John Hancock might be involved.
Topic Author
boglechu
Posts: 148
Joined: Sat Jan 30, 2016 2:19 am

Re: when rolling over ira to 401k, do you try to track how the old funds grew?

Post by boglechu »

from employer and emplyee contribution in 457b, 25k was rolled over to VG rollover IRA in 2016
From 2016-2017, the VG rollover IRA grew from 25k to about 30k.
In 12/2017, I will roll over VG rollover IRA to my 401k in amount of 30k.

Assume the 30k that is deposited to my 401k grows 5%/year. In 30 years, it will be $130k (30k*(1.05)^30). The capital gain is 30l->130k is 100k.

If I pulled the 130k out in 2047, will i be charged capital gains on 100k as well as income tax on the 100k?
barelybarefoot
Posts: 57
Joined: Mon Oct 21, 2013 7:15 pm

Re: when rolling over ira to 401k, do you try to track how the old funds grew?

Post by barelybarefoot »

See post above. This is all money in pretax 401k/IRA. When you take it out at 59 1/2 is taxed as ordinary income. There's no taxing of gains -- it's alone bucket as far as taxes are concerned. For every $1 you take out, you'll be taxed at ordinary income rate on that $1.

This is different from a taxable account. Since your investing money you've already paid taxes on, taxes apply only to capital gains.

That's why you can do whatever you want while money is inside these pre-tax retirement vehicles (401k/IRA) without worry about tax implications.

See wiki for basic difference in 401k/IRA/taxable account -- very helpful to wrap your mind around each and advantages of each.
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