Prev 401k loss

[krish727]

Hi - I have a rolled over 401k amount of abt 150k at fidelity and I noticed that whatever it got rolled over into made it loos 20% in the past 1 year. I am thinking of moving this over into a IRA account at fidelity but looking for some suggestion to invest in. I am 50 and planning to retire in next 15 yrs

Also can I do a roll over into Roth IRA for future tax savings once I move the funds into IRA first ? I am bit confused about the backdoor policy of Roth IRA.

thanks

[mhalley]

I’m confused, is the money still in a 401k or in an ira? Last year was a bad one for everyone, a 20% loss is pretty normal. If you roll over the 401k to an ira, you can’t do backdoor Roth’s going forward. If you rolled the 150 k into a Roth you would have to pay taxes, so that is not a good idea.
Rolling the 150k into the Roth would just be a rollover, not a backdoor Roth. The backdoor Roth is used when you make too much money to contribute directly to a Roth, so you contribute to a traditional ira first, then roll that money into the Roth. You can only do this when you have zero dollars in traditional iras as of Dec 31.
As to what to invest in, if you post the funds available (give name, ticker and er) in your 401k we can give suggestions.
https://www.bogleheads.org/wiki/Backdoor_Roth

[Doctor Rhythm]

I’m interpreting this as,
1) you currently have a 401k using Fidelity, and
2) this 401k was funded at least in part by money that was rolled over from an earlier retirement account (perhaps from a previous employer).
3) You wish to do another rollover from the 401k into an IRA.
4) You are age 50 and still working for the employer sponsoring the 401k.

Let us know if this is correct. If #2 is correct, you may able to move the rolled over contributions in your 401k into an IRA, despite #4. You should probably ask your employer HR office about your 401k plan’s rules.
https://www.fidelity.com/retirement-ira ... llover-ira (See the FAQ about 401k to IRA rollovers while you are still working for the plan sponsor).

I think the bigger question is why you would want to do this.

Eta: I made additional comments below based on your 2021 post.

[HomeStretch]

… I have a rolled over 401k amount of abt 150k at fidelity …

Did you rollover an old 401k into a current employer 401k at Fidelity?

Were the old 401k balance(s) rolled over Traditional or Roth?

…I noticed that whatever it got rolled over into made it loos 20% in the past 1 year. …

Investments funds are usually selected by you as the plan participant/account holder. What did you choose to invest the funds in? Equities and bonds were down significantly in 2022.

… I am thinking of moving this over into a IRA account at fidelity …

If the funds are in a current employer 401k plan, you need to check the plan document to see if in-service distributions are allowed. IRS rules will not allow you to distribute all fund sources.

… looking for some suggestion to invest in. …

For best feedback, post your financial picture using the template in ‘Asking Portfolio Questions’ here:
https://www.bogleheads.org/wiki/Asking_ ... _questions

… Also can I do a roll over into Roth IRA for future tax savings once I move the funds into IRA first ? I am bit confused about the backdoor policy of Roth IRA. …

Yes, you can convert a Rollover (pretax) IRA to a Roth IRA in any amount. The amount converted will be subject to ordinary income tax for Federal and state. A decision to convert and pay taxes now starts with a comparison of your marginal tax rate now versus your projected rate at withdrawal in retirement. See the BH wiki about Roth conversions:
https://www.bogleheads.org/wiki/Roth_IRA_conversion

‘Backdoor’ maneuvers for an IRA and 401k involve a Roth conversion as one of the steps. But you don’t seem to need a backdoor Roth contribution method. Rather you seem to be asking about a Roth conversion.

[Doctor Rhythm]

Actually - it looks like you asked this question in 2021 here: viewtopic.php?p=5901030#p5901030

1) The fidelity account I am thinking of rolling over into an IRA at Vanguard is from my previous employer.
2) I do have an IRA account with Vanguard from the time when I was an independent contractor
3) My current employer's 401k plan is also with fidelity.

The reason to move from Fid. to Van. is for consolidation purposes. I do have various funds and ETF's at vanguard and would like to have the prev. employer amount there as well so as to be easy for management.

Has the situation changed since 2021 - other than last year’s bear market? If not, then I think the advice given in 2021 is still relevant. You didn’t state here or the in your 2021 thread what funds you chose, but -20% sounds about right for a broad market, equity-heavy portfolio. Would be worse if you were tilted towards tech.

Personally, I wouldn’t bother with this now if my 401k plan offers good fund options and I am still contributing to it. It wouldn’t really consolidate anything, because the 401k account remains open and active.

[BogLurkHead]

Sounds like we’ll see him again in 2025