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Hello all! I don't post here much but have been following this forum a lot over the past 8 years or so.
I'm 44 years old and left a job that I had been with for 17 years last October. I contributed the max to that 401k since I was hired at the age of 26. My employer match wasn't that great (dollar for dollar up to 20% of what I contributed). So, the max I ever received was $3600 (the last full year I worked there -2017). The current balance as of today in that account is $428,707.
I started my new job the end of October and so far, so good. I enrolled in their 401k ASAP and have a little over $6k in there. Their match is dollar for dollar up to 5% of my salary. I should get around $7000 this year in company match.
I just assumed I would roll my old 401k into the new 401k and go from there. I met with my current employer 401k financial group and we picked a more aggressive investing strategy. I plan on continuing contributing the max as long as I can. I probably was too cautious with my old plan they said. I would like to retire by 62, but would love to retire earlier if possible! House will be paid off by age 55. Only child is in Kindergarten now, so I say 62 because that would be when he finishes college. I obviously know a lot can change in 18 years!
When I reached out to my old plan, I've been bombarded with emails and voicemails why I should roll my money into one of their traditional IRAs. I don't know if it's a sales pitch (probably), but all I keep hearing from them is the more choices I'd have and how a traditional IRA is better. I've been doing research on this the past few days and I still haven't decided what to do. Anybody want to offer advice on one scenario being better than the other? Is their any wrong choice? Thanks for reading and any advice!
Do NOT roll it into the new plan. I did that once and when I realized the investments were performing badly, I found that I couldn't get it out again till I quit, unless I could prove hardship. (I quit a couple of years later for unrelated reasons and my money was outta there ASAP afterwards.) Even if you like the new plan, it could change. A former employer was acquired by GE years ago and the 401(k) options went from the full range of Fidelity funds to a truly crappy selection of funds, mostly owned by GE- plus GE stock, of course.
Have you considered keeping it in your old employer's plan? You could tweak the investment mix, and I believe that 401(k)s are better-protected against liability if you're sued than IRAs are.
If you decide to move it, go to Vanguard or another low-cost fund manager and consider a mix of ETFs. I'm not a financial advisor, and which ETFs and how much of each is a matter of your personal risk tolerance, but there are plenty of model ETF portfolios on the Web, including the Boglehead forum.
Plenty of people will want to "help" you "manage your wealth". Be skeptical.
If you plan to contribute to a Roth IRA via a backdoor method you need to have $0 in a traditional IRA. In order to do this you need to either keep your 401k monenies in each account or roll into the current employer 401k.
Your current employer 401k plan may offer a brokerage link type account. Example my wife can put 100% of 401k funds into the brokerage account (under the 401k umbrella) and buy any fund she wants. My employer is 95%. So for example I rolled over my previous 401k into my current 401k, 5% went to the core account and 95% went to the brokerage account where I purchased an index fund.
Personally even if I did not contribute toward a backdoor IRA at this time I would've rolled it over because I like to have my retirement consolidated and I have the brokerage link option.
If your current 401k does not offer the brokerage link or you never plan on contributing toward a Roth IRA via the backdoor method I would personally roll your old 401k into an IRA at a well known retirement company such as Vanguard, Fidelity, etc.
Maybe I am misreading. The definition of a backdoor Roth is taking traditional IRA $ and converting it into a Roth account.
Yes, technically you can do it with money in a tIRA already but it has tax consequences and gets "sticky", waaaay easier to go the route I laid out if your employer's 401k offers a brokerage link option. There is no downside.
I see no value to rolling from one 401K to another. There will always be a limit to the funds you have to choose from. If you can roll, you should roll to an IRA IMO.
I see no value to rolling from one 401K to another. There will always be a limit to the funds you have to choose from. If you can roll, you should roll to an IRA IMO.
There are 401k plans that offer a brokerage account option where you can buy any fund you want. In addition if one wants to contribute to a backdoor Roth it makes it a lot cleaner to roll your previous 401k into your new 401k vs a traditional IRA (assuming the funds were pretax which for most people they are).
If you have pretax ira monies when you you attempt to convert it’s a taxable event, if you have no pretax ira monies it’s not taxable
Well of course. I thought everyone understood that.
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Maybe I am misreading. The definition of a backdoor Roth is taking traditional IRA $ and converting it into a Roth account.
