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  • 401k Rollover Question

    Hi there,

     

    I recently left an employer and have a 401K with them (investment options not amazing).  I would like to consolidate my accounts into my Fidelity account as I like their investment options better.  I only work as an employee so I do not have a solo401K.  If I were to rollover my money into a IRA, would that hinder my ability to do back door roths in the future?  Any other options for rolling over a 401K account from a prior employer that I'd rather have somewhere else.  Thank you in advance.

  • #2
    You can always do a backdoor Roth. It's the prorata rule that sucks. Are you going to have a new job that has a 401k?

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    • #3
      Yes, rolling it into a traditional IRA would result in pro rata taxation of Roth conversions of non-deducted contributions (i.e. backdoor Roth).

      The answer is to earn the tiniest bit of self-employed income - a common means is doing some online surveys, should be a WCI blog post and several forum threads about it - and create an individual 401(k) which accepts incoming rollovers (Fidelity does) and roll the prior employer 401(k) into that.

      Another option may be to roll it into your current employer's 401(k) if you have good investment options and it allows for incoming rollovers.

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      • #4




        I recently left an employer and have a 401K with them (investment options not amazing).  I would like to consolidate my accounts into my Fidelity account as I like their investment options better.  I only work as an employee so I do not have a solo401K.  If I were to rollover my money into a IRA, would that hinder my ability to do back door roths in the future?  Any other options for rolling over a 401K account from a prior employer that I’d rather have somewhere else.  Thank you in advance.
        Click to expand...



        1. You could roll your prior 401k directly into a Roth. As a resident, you may be at the best time of your life to do this. At the same time, if you are in a low tax bracket, you shouldn't have to worry about the back door. Is your spouse a high earner?

        2. The IRA rollover will not hinder you from completing step 1 of the backdoor maneuver, which is to contribute to a nondeductible IRA. If you contemplate being able to open a SOLO-k at some point in the next couple of years, go ahead and contribute to the nondeductible each year. When you are later able to set up a SOLO, you can then do step 2, which is to convert your nondeductible IRA to a Roth. You will probably owe taxes, but only on the growth in the account.


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

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        • #5
          Thank you everyone for your responses and help!

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