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Need some help consolidating retirement accounts for future hubs ....

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  • Need some help consolidating retirement accounts for future hubs ....

    Just making sure my thinking is correct. Working on consolidating his retirement accounts.

    He currently has:

    Rollover IRA

    Multiple 401Ks (currently at Fidelity, Transamerica, Wells Fargo)

    Future hubs is getting ~$8,000 in 1099 income this year. He has W2 income as well for this year with some 401k contributions but not maxed out (no longer employed there, currently in between jobs). I want him to be able to do backdoor Roth (note: he might be under the income limit for this year but won't once we're married, slated for 2017). He currently has no Roth IRA.

    I was thinking of this:

    1) Open solo-401k, roll over all the prior 401ks and IRAs. Choosing this option so we can do backdoor Roths for him in the future.

    -Which 401k plan should we use? Would love to do Vanguard (where my Roth IRA is) but they do not take roll overs right?. But, I know someone who had a SEP-IRA with Vanguard and she was able to convert it to a Solo-401k at Vanguard...so maybe that is a "backdoor" way of doing that - anyone else know about this?

    -Fidelity seems to be a great choice as well and he already has an account there.

    -Should we consider converting that IRA (~40K) to a Roth this year? He will be in the 25% marginal tax bracket. Once married, we will be in the 33% or 35% marginal bracket.

    2) Goal is for him to get W2 job (likely soon, one in the works) so will likely have a new 401K at new job.

    -Was thinking of just waiting for the new job and see if their 401k accepts rollovers. But seems like having a solo401k  will be helpful for any 1099 income he may receive this year and in the future.

    Thanks as always!

     

     

  • #2
    Congrats on the upcoming nuptials.  His income is likely lower this year so convert now to a Roth. This is especially important to do since your income will not count this year.  I would call vanguard with the rollover question. I have found them responsive on the phone.  I have heard good things about fidelity and schawb also.

    Comment


    • #3




      Congrats on the upcoming nuptials.  His income is likely lower this year so convert now to a Roth. This is especially important to do since your income will not count this year.  I would call vanguard with the rollover question. I have found them responsive on the phone.  I have heard good things about fidelity and schawb also.
      Click to expand...


      Just talked to Vanguard. They do not take rollover IRAs. In fact the rep told me they only accept rollovers from another individual 401k. He actually said some customers did this - open solo 401k at Fidelity, roll stuff into there, then transfer that account to Vanguard. Seems like a paperwork headache, but not impossible.

      Now I am thinking - converting that $40K IRA to Roth. Do you just pay taxes when you file or does it come out of the actual IRA?

      Roll over the other 3 x 401ks into a solo 401k at Fidelity ... or wait for new W2 job.

      Comment


      • #4
        I did a Roth conversion recently. You pay the taxes on 4/15.  It is better not to take the money out of the retirement account.  You want that money to keep growing.  Take money from a taxable account to pay the taxes. Vanguard has a button that says Roth conversion so it could not be easier.  Bummer about no rollovers.

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        • #5


          -Was thinking of just waiting for the new job and see if their 401k accepts rollovers. But seems like having a solo401k  will be helpful for any 1099 income he may receive this year and in the future.
          Click to expand...



          • SOLO-k would be my choice over r/o to new job's 401k. Once your accounts are in the work 401k, they are stuck there and at the mercy of the employer's plan, including plan sponsor. He would have much more flexibility w/his own SOLO-k.

          • Convert the TIRA to a Roth while he is in a lower bracket but do not have taxes withheld. Not only would he reduce the future tax-free growth, but the taxes w/h would also be treated as an early distribution. He would owe both tax and penalty on the w/h taxes. Crazy, right?

          • @hatton1 is correct - he will receive a 1099R next January and pay the extra taxes when he files his 2016 income tax return.

          • Since he has some SE income and w/h 1099R income, might be worthwhile to do a tax projection to see if he needs to pay in an estimate in 3rd or 4th quarter to avoid paying a penalty in April.

          Working to protect good doctors from bad advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087

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          • #6
            Thank you Johanna. Fidelity Solo 401k it is!

            I'm very comfortable with selecting Vanguard funds since that is what I use. I know that bogleheads has tables to help folks find the closest equivalent funds. Will need to do some research into the fidelity funds

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            • #7
              Agree open a solo 401k and roll everything that way you have control of it.  We used fidelity no reason to transfer to vanguard IMO.

               

              http://www.bogleheads.org/wiki/Fidelity

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              • #8
                I just mailed my paperwork for a Fidelity solo 401k yesterday.  There isn't that much of it.  The fees on the equivalent funds to what I have been using in my Vanguard SEP IRA are essentially equivalent.  The only downside that I can see so far for Fidelity is that the contributions have to be a mailed check and cannot be performed electronically.  I have had the thought of opening the 401k at Fidelity and then rolling it back to a 401k at Vanguard but the inability to get admiral shares at Vanguard will probably keep me at Fidelity for the long run (apparently a difference of 0.1% is my cutoff).

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                • #9
                  Would call again. I did a roll-over to Vanguard last fall and their site (still) states it's possible.

                   

                  https://investor.vanguard.com/account-transfer/transfer-ira

                  Comment


                  • #10




                    Would call again. I did a roll-over to Vanguard last fall and their site (still) states it’s possible.

                     

                    https://investor.vanguard.com/account-transfer/transfer-ira
                    Click to expand...


                    Thanks...this is not for the solo 401k roll over, this is just roll over an IRA/401k/403b to an IRA.

                    Comment


                    • #11







                      Congrats on the upcoming nuptials.  His income is likely lower this year so convert now to a Roth. This is especially important to do since your income will not count this year.  I would call vanguard with the rollover question. I have found them responsive on the phone.  I have heard good things about fidelity and schawb also.
                      Click to expand…


                      Just talked to Vanguard. They do not take rollover IRAs. In fact the rep told me they only accept rollovers from another individual 401k. He actually said some customers did this – open solo 401k at Fidelity, roll stuff into there, then transfer that account to Vanguard. Seems like a paperwork headache, but not impossible.

                      Now I am thinking – converting that $40K IRA to Roth. Do you just pay taxes when you file or does it come out of the actual IRA?

                      Roll over the other 3 x 401ks into a solo 401k at Fidelity … or wait for new W2 job.
                      Click to expand...


                      Is this something new? I just rolled over a Citigroup SEP-IRA to Vanguard and then completed a Roth conversion with Vanguard less than 1 year ago

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                      • #12
                        Darr- I was referring to the Vanguard Solo/individual 401k specifically.

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