401k " to do" when leaving job

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arsenalfan
Posts: 1013
Joined: Mon Dec 09, 2013 12:26 am

401k " to do" when leaving job

Post by arsenalfan »

Leaving W2 job for 1099 work this July 2021.

W2 job has mediocre 401k - $19.5k + 9k match, immediate vest. I'm guessing the plan is pro-rated (ie cannot lump-sum the 19.5k now and get the free 9k now). I intend on rolling this mediocre 401k into my new 1099 individual 401k.

For new 1099 job, I setup a Vanguard individual 401k with both regular and Roth accounts. Plan to do 19.5k Roth + 38.5k pretax (I'm not 50 yet).

Anything I'm missing?
sailaway
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Joined: Fri May 12, 2017 1:11 pm

Re: 401k " to do" when leaving job

Post by sailaway »

Has the Vanguard solo 401k started accepting rollovers? Their standard plan did not accept rollovers when I was looking into it.
dukeblue219
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Joined: Fri Jan 29, 2016 12:40 pm

Re: 401k " to do" when leaving job

Post by dukeblue219 »

Before you leave, double check your personal contact information is accurate in the 401k. It can be pain to reach your old employer's HR to update your person info in the 401k providers system in order to process a rollover.
tashnewbie
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Re: 401k " to do" when leaving job

Post by tashnewbie »

You could probably increase your deferral percentage so that you get more employer match. You’d have to check your plan/with HR to see how high you can make it. Also you’ll want to confirm how the match works so that you can maximize it to the extent possible before you leave.

I’ve heard Vanguard solo 401ks don’t allow incoming rollovers. Confirm. I think E-trade and maybe Fidelity do. Confirm.
JediMisty
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Location: Central NJ

Re: 401k " to do" when leaving job

Post by JediMisty »

arsenalfan wrote: Wed Apr 07, 2021 6:04 pm Leaving W2 job for 1099 work this July 2021.

W2 job has mediocre 401k - $19.5k + 9k match, immediate vest. I'm guessing the plan is pro-rated (ie cannot lump-sum the 19.5k now and get the free 9k now). I intend on rolling this mediocre 401k into my new 1099 individual 401k.

For new 1099 job, I setup a Vanguard individual 401k with both regular and Roth accounts. Plan to do 19.5k Roth + 38.5k pretax (I'm not 50 yet).

Anything I'm missing?
Will you have enough income for the entire 38.5k? The "employer" component of a Solo 401k works like a SEP-IRA, in that the ER portion is a percentage of your net income, minus the deductible portion of your Self employment tax. There are experts here who can give you a link to the IRS explanation. One such expert is Spirit Rider.
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Watty
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Re: 401k " to do" when leaving job

Post by Watty »

arsenalfan wrote: Wed Apr 07, 2021 6:04 pm Plan to do 19.5k Roth + 38.5k pretax (I'm not 50 yet).

......

Anything I'm missing?
Be sure to check on the details of how the maximum contribution amounts work when you have multiple plans during the year.

At least with traditional w2 401k accounts I am pretty sure that if you contribute $10K to a 401k then change jobs then you can only contribute $9.5K to your second employers 401k because of the yearly $19.5K limit.

People have posted about over contributing and it sounded like a pain to get it straightened out.
Topic Author
arsenalfan
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Joined: Mon Dec 09, 2013 12:26 am

Re: 401k " to do" when leaving job

Post by arsenalfan »

Thanks, great points.

1. Just confirmed Vanguard i401k accept incoming rollovers of Traditional only. New thing for Vanguard, not well-established yet, everything done on paper (get check from old 401k mailed to me, and forward it to Vanguard with specific statement that it's a rollover, etc etc).

2. I start job in July. Rollover of 401k to Vanguard will prob be done by October. In December, I'll do a reckoning and see what I can plop into Roth i401k as employee, and i401k as employer. I'm guessing I'll only be able to put ~$9000 into Roth i401k as an employee. Then I'll tally everything up, and put the rest in as the employer-side traditional i401k.

I anticipate another BH post asking to check my math at that time!
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