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Where to roll over the SEP-IRA?

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  • Where to roll over the SEP-IRA?

    Please help me sort this out:

    So I want to do a back door Roth for my wife (too late for '16, so for '17).  She has a very small SEP-IRA with Vanguard (around $5000), which will get on the way in terms of pro rata stuff.  She also has a solo 401k with Vanguard.  In the future she will continue to contribute to the 401k.  Now, Vanguard does not allow to roll over the SEP into a 401K (not sure why, seems silly).  So what to do?  Open another solo 401k elsewhere and rollover there?  Or roll into a Roth, pay pro rata and forget about it, keeping everything with Vanguard?  Any other good options?  Sorry if this is very simplistic... I did my backdoor Roth for myself the first time in 2016 (was able to rollover my SEP into a 457 plan which I have with my employer, so that wasn't too bad).  Thanks!

  • #2
    Yes, by far the easiest thing to do with just $5,000 is to convert the SEP IRA to a Roth IRA.

    A business can not generally have more than one 401k plan at the same time. However, you could amend the 401k plan at Fidelity, rollover the Vanguard individual 401k to a Fidelity solo 401k and rollover the SEP IRA to the Fidelity solo 401k (they do accept incoming SEP IRA rollovers).

    The other advantage at Fidelity is they do allow their solo 401k plan to purchase premium class index funds. Vanguard does not allow an individual 401k plan to purchase Admiral share index funds.


    • #3
      Thank you.  Yes I think I am between those two options...  Not sure what is best long-term, never did anything with Fidelity, but maybe worth looking into.


      • #4
        open a 401k at fidelity which allows incoming rollovers, has a wide selection of excellent low cost index funds, and yea, then do the backdoor rIRA.


        • #5
          I'm in the process of this as well and looking at etrade vs. Fidelity, Where to Open Your Solo 401K has provided some good info.