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Rollover into Roth IRA versus employer retirement plan

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  • Rollover into Roth IRA versus employer retirement plan

    I have recently graduated my fellowship and will be starting my first physician job in September. My fellowship employer sponsored a retirement plan, and I was able to save ~$7200 in a traditional 401/403 and $20.5k in a Roth 401/403. I won't gain access to my employer's retirement plan until after one year of service (so September 2023).

    I had been planning on rolling all of that over into my Roth IRA in order to take advantage of relatively low taxes this year (fellowship salary January-June, attending salary only September-December). However, my new state, Minnesota, has poor asset protection for Roth IRA's. Would I be better off waiting until 2023 to roll over into my new employer's plan, or should I still proceed with the rollover into the Roth IRA this year?

  • #2
    Roll it all into the Roth IRA and pay the relatively minimal taxes on the $7200 portion. For sure.

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    • #3
      Originally posted by bovie View Post
      Roll it all into the Roth IRA and pay the relatively minimal taxes on the $7200 portion. For sure.
      I agree with this advice 100%. Don't let the asset protection tail wag the dog.

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      • #4
        I disagree.

        It certainly makes sense to rollover the traditional 401k and traditional 401k balances to a Roth IRA to take advantage of your lower marginal tax rates this year.

        However, there is no benefit from rolling the Roth 401k and Roth 403b balances into a Roth IRA. A Roth IRA can not be rolled over to anything but another Roth IRA.

        Leave the Roth 401k and Roth 403b balances in their respective plans. This will preserve the ability to rollover to your new employer's plan.

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