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IRA rollover to 401k

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  • IRA rollover to 401k

    I have an MD friend who has an old IRA which has significant post tax contributions. He also has a newer 401k from his current job. His advisor tells him he can’t roll the IRA into his 401k. He’s new in the WCI arena but financially fairly well informed. Is his advisor giving him correct information? What am I missing here?

    Secondly, can he open another IRA to initiate a back door Roth? I think you can have several IRA’s but that doesn’t increase your yearly contribution limit.

  • #2
    the 401k has to allow rollovers.
    its not in the FA interest to allow it.
    sure but still prorata....

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    • #3
      As pointed out by Peds, they can only rollover the pre-tax balances to a 401k that accepts such rollover. Most do now, but it will have to be checked

      A rollover of just the pre-tax balances in all traditional SEP and SIMPLE IRA accounts is exactly what he wants to do. Leaving behind just the non-deductible basis. Then a Roth conversion can be done with little to no tax liability.

      As indicated above all traditional SEP and SIMPLE IRA accounts are treated as one IRA account for pro rata purposes. Opening another IRA account accomplishes nothing.

      Your friend needs to fire this obviously incompetent advisor. It just so happens WCI has just such a course.

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      • #4
        Thanks very much for that help.

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