401K to an IRA back to a different 401K in same year?

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Investing4Truth
Posts: 14
Joined: Sat Jan 24, 2015 12:11 pm

401K to an IRA back to a different 401K in same year?

Post by Investing4Truth » Fri Jul 13, 2018 7:16 pm

Simple question: can you rollover an old 401K to an IRA, and then rollover from that IRA to another 401K within the same year?

I was recently laid off from work so I have the option of rolling over my 401K into an IRA, but I may eventually find a new job within the same year that offers a 401K. If I'm still stuck doing 1 rollover a year regardless, then I could wait until I find a job with benefits and then just do a direct 401K to 401K transfer.

However, there's no telling when I might find a new job, and given the nature of the industry I work in, it's likely I'd be doing contract work instead, which usually doesn't offer benefits or a 401K plan. I'm inclined to think it's best to rollover to an IRA now, and even if I get immediate work with benefits I can contribute to my IRA for a year and deduct that from my taxes until I'm able to eventually roll it into my new employer's 401K plan again.

Does that make sense?

retiredjg
Posts: 33588
Joined: Thu Jan 10, 2008 12:56 pm

Re: 401K to an IRA back to a different 401K in same year?

Post by retiredjg » Fri Jul 13, 2018 7:39 pm

The only rollovers that "count" for your "one per year" are IRA to IRA rollovers. So no worries there. None of what you are considered will be your "one per year".

If your current 401k plan is decent, you could consider just leaving the money there until you have a better idea of what is going on. If not, roll to IRA and call it good.

gostars
Posts: 439
Joined: Mon Oct 09, 2017 7:53 pm

Re: 401K to an IRA back to a different 401K in same year?

Post by gostars » Sat Jul 14, 2018 3:56 am

The primary reason you might not want to do a rollover IRA is if your income is high enough to exceed the Roth contribution limits and you're doing a backdoor Roth. Keeping the money in a 401k would allow you to do the backdoor in the future without worrying about the pro-rata rule, assuming you have no other pre-tax IRA money. Another reason would be if your 401k provides better value than what you would get in an IRA. For example, if your 401k charges no fees and gives you access to institutional-class Vanguard or Fidelity index funds, then why leave?

Investing4Truth
Posts: 14
Joined: Sat Jan 24, 2015 12:11 pm

Re: 401K to an IRA back to a different 401K in same year?

Post by Investing4Truth » Sat Jul 14, 2018 9:53 am

Thanks for the responses and clarifying! My old 401K is pretty shoddy, its only real value that superseded the fees I'd get was in getting the company matching, but since that's gone and I don't need to worry about the one per year limit there's no point keeping it there now. :-)

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