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Rolling over a SEP-IRA to a solo 401K

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  • Rolling over a SEP-IRA to a solo 401K

    Hi,

    I am trying to roll over a SEP-IRA in Vanguard to a solo 401k in Fidelity.  Has anyone done this?  How do I do it?  Both are already setup.  Will the SEP-IRA be taxed?  Thanks.

  • #2
    No, your SEP will not be taxed.

    You just need to get the appropriate paperwork filled out with Fidelity and they will handle the transfer electronically, really not difficult. Call a Fidelity  representative at 800-343-3548 and they should be able to walk you through it.

    If you are going to do a backdoor Roth conversion in 2017, you need to complete the rollover before 12/31.
    Working to protect good doctors from bad advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087

    Comment


    • #3
      My wife had to fill out paperwork with Vanguard to initiate this.  Took forever because Vanguard screwed it up at least once, if not twice.  Fidelity was solid.  Vanguard needs to get its act together as a brokerage firm.  My family has had multiple issues with the simple movement of funds with Vanguard.  Just this week they sent another family member incorrect info on both a TIRA and joint taxable account after the information had been correctly entered online.  When you talk to Vanguard, double check the paperwork and don't let them off the phone until you've checked what they send you via email.  If there is any question get their boss on the phone.  The SEP thing was ludicrous - I had a Fidelity agent and Vanguard agent on conference call together and everyone agreed that we would fill out paperwork X.  Fidelity said it had to be initiated on Vanguard's end, so we followed Vanguard's instructions.  Vanguard sent a letter back 2 weeks later saying we had filled out the wrong paperwork.  Indeed, we should have filled out Y.  Talk to superiors if you need to.

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      • #4
        It *should* be as simple as following directions for a custodian-to-custodian transfer of assets.  This is *supposed* to be a very conceptually simple and routine thing to do.  However, never underestimate the ability of drones to screw up a simple task.

        Comment


        • #5
          Hello this is somewhat related,

          I have a SEP-IRA from my prior-to-med school employer with only $1,000 in it.
          With my current Attending MD salary I will have to do backdoor Roth contributions.
          How do I "get rid of" this SEP-IRA in order to avoid pro-rata rule and simplify my life?

          One option I have considered is an individual 401K.

          Alternatively, cashing that SEP-IRA and paying tax on it is another option. Are there any negative long-term consequences from this latter option? (it sure seems to be an easier way out of this)

          Thank you.

          Comment


          • #6




            Hello this is somewhat related,

            I have a SEP-IRA from my prior-to-med school employer with only $1,000 in it.
            With my current Attending MD salary I will have to do backdoor Roth contributions.
            How do I “get rid of” this SEP-IRA in order to avoid pro-rata rule and simplify my life?

            One option I have considered is an individual 401K.

            Alternatively, cashing that SEP-IRA and paying tax on it is another option. Are there any negative long-term consequences from this latter option? (it sure seems to be an easier way out of this)

            Thank you.
            Click to expand...


            If you have a 401(k) through your employer, you can can roll it into your employer plan if your plan accepts outside rollovers.

            With only $1,000 in it, I think converting the SEP to a Roth IRA is the easiest option.  Sure, you will have to pay taxes on the $1,000, but that is the only downside.

            Comment


            • #7







              Hello this is somewhat related,

              I have a SEP-IRA from my prior-to-med school employer with only $1,000 in it.
              With my current Attending MD salary I will have to do backdoor Roth contributions.
              How do I “get rid of” this SEP-IRA in order to avoid pro-rata rule and simplify my life?

              One option I have considered is an individual 401K.

              Alternatively, cashing that SEP-IRA and paying tax on it is another option. Are there any negative long-term consequences from this latter option? (it sure seems to be an easier way out of this)

              Thank you.
              Click to expand…


              If you have a 401(k) through your employer, you can can roll it into your employer plan if your plan accepts outside rollovers.

              With only $1,000 in it, I think converting the SEP to a Roth IRA is the easiest option.  Sure, you will have to pay taxes on the $1,000, but that is the only downside.
              Click to expand...


              I concur with Clint. Just convert to a Roth and pay tax on $1k. With proper management, you should easily overcome the taxes you pay with tax-free future growth.
              Working to protect good doctors from bad advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087

              Comment


              • #8




                Hello this is somewhat related,

                I have a SEP-IRA from my prior-to-med school employer with only $1,000 in it.
                With my current Attending MD salary I will have to do backdoor Roth contributions.
                How do I “get rid of” this SEP-IRA in order to avoid pro-rata rule and simplify my life?

                One option I have considered is an individual 401K.

                Alternatively, cashing that SEP-IRA and paying tax on it is another option. Are there any negative long-term consequences from this latter option? (it sure seems to be an easier way out of this)

                Thank you.
                Click to expand...


                I personally hate paying any more taxes than are absolutely necessary.  So I'd look for an employer plan that allows rollovers or establish an i401k (provided you have this income obviously) and roll it over.  Chances are your marginal rate now is lower than what either your marginal or effective rate will be in the future.

                Comment

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