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Posted on 12/18/25 at 11:11 am to mule74
quote:
I was unaware of that. But even if you can, why would you? It’s such an advantage to have the freedom to invest your portfolio.
This is very common for people who do back door roth. Otherwise they killed by the pro rata rule.
Posted on 12/18/25 at 12:42 pm to H2A2
I like the flexibility of rolling over into the new plan. Assuming you have access to decent funds in said new plan. Rule of 55, later RMDs, plan loans in a crunch.
Posted on 12/18/25 at 1:15 pm to gpburdell
quote:
pro rata rule
I thought I understood this, but apparently not.
This post was edited on 12/18/25 at 1:31 pm
Posted on 12/18/25 at 1:26 pm to FieldEngineer
...
This post was edited on 12/18/25 at 1:31 pm
Posted on 12/19/25 at 7:25 am to mule74
quote:
was unaware of that. But even if you can, why would you? It’s such an advantage to have the freedom to invest your portfolio.
My plan offers index funds with fees below .01% and has a brokerage option so I can buy basically whatever I want.
I already pointed out the backdoor Roth issue, and others have added loans and age 55 withdrawals.
Lastly I’ll say this - most people are terribly emotional investors. Rolling it into an IRA for “flexibility” costs those people dearly.
Posted on 12/19/25 at 8:22 am to slackster
The average investor is not going to beat American Funds or target date funds. They are too emotional like you said. Riding a tech wave with +70% exposure that could reverse fast (regardless of solid sector fundamentals) because same investor psychology drives market prices.
Posted on 12/20/25 at 8:53 am to Jinks
I honestly don’t understand why someone would pay a financial advisor with all the tools out there now esp AI.
Posted on 12/20/25 at 9:15 am to PlanoPrivateer
Agree with gpa on this .
consider a Direct Rollover into a self-directed IRA …. be careful to carefully follow the procedure for doing this so that you don’t inadvertently cheat a tax liability for yourself.
You can open a new 401-k with your new employer for yourself tenure ther . When you leave there you would repeat the process, adding to the existing IRA account. I use Fidelity, but there are many you can choose from.
consider a Direct Rollover into a self-directed IRA …. be careful to carefully follow the procedure for doing this so that you don’t inadvertently cheat a tax liability for yourself.
You can open a new 401-k with your new employer for yourself tenure ther . When you leave there you would repeat the process, adding to the existing IRA account. I use Fidelity, but there are many you can choose from.
This post was edited on 12/20/25 at 9:25 am
Posted on 12/20/25 at 9:46 pm to slackster
quote:
Good answers unless OP ever wants to do backdoor Roth contributions…
I did the old employer 401k -> IRA move, then years later had to unwind that to do backdoor Roth.
Highly suggest not following the common advice in this thread and instead just let it ride where it's at. Don't move it, don't touch it. Assuming you have access to reasonable options, and especially if you have access to Fidelity Brokerage Link or similar.
Posted on 12/21/25 at 8:24 am to PlanoPrivateer
quote:
Moving to a new job. Roll your old 401k into an IRA. Many more choices,
Am I the only one who never does this due to the problems it causes for backdoor ROTH conversions? Even before I ever had this issue I was looking ahead. I either keep my 401ks where they are or roll into new plan. With financial apps it's easy to keep up with.
ETA: I see the post above me raised the same issue.
This post was edited on 12/21/25 at 8:37 am
Posted on 12/21/25 at 8:36 am to Teddy Ruxpin
Same
Posted on 12/21/25 at 9:23 am to slackster
quote:I can’t speak for every company, but Vanguard definitely offers a traditional IRA as well as a rollover IRA so when we back door each January, we only use the traditional IRA to do that
Good answers unless OP ever wants to do backdoor Roth contributions…
Posted on 12/21/25 at 9:32 am to saderade
quote:
I can’t speak for every company, but Vanguard definitely offers a traditional IRA as well as a rollover IRA so when we back door each January, we only use the traditional IRA to do that
That's not the issue. You can Google "pro rata rule and ROTH IRA backdoor" to get an explanation. Could be a big tax problem.
Posted on 12/21/25 at 3:03 pm to Teddy Ruxpin
quote:Ahh so they look at the total amount of every IRA you have, not as separate entities.
That's not the issue. You can Google "pro rata rule and ROTH IRA backdoor" to get an explanation. Could be a big tax problem.
Posted on 12/21/25 at 5:01 pm to saderade
quote:
I can’t speak for every company, but Vanguard definitely offers a traditional IRA as well as a rollover IRA so when we back door each January, we only use the traditional IRA to do that
A rollover Ira is a traditional Ira.
If you have a rollover Ira and do a back door, you are going to have pro rata rule problems.
Posted on 12/21/25 at 5:05 pm to slackster
quote:
Good answers unless OP ever wants to do backdoor Roth contributions…
This is why tax advice is best when it’s personalized.
With most companies having a Roth 401(k) option, I think you will see less of the back door route. Unless you are already maxing 401(k) or it’s a question of investment options.
Absolutely impacts some people, not a majority.
Posted on 12/21/25 at 5:07 pm to Tig3rman
quote:
Assuming you have access to decent funds in said new plan.
That’s the issue.
Many plans have awful options.
I’d rather pay a bit more in fees to have an open infrastructure
Posted on 12/29/25 at 4:49 pm to LSUFanHouston
quote:So after doing some research, it appears that the pro-rata rule is applied per individual, not per household, even when filing jointly. So I will be able to do a back door Roth IRA because I have no IRA accounts, only a 401(k). But my wife will not be able to without the pro-rata applying because the IRA is in her name.
If you have a rollover Ira and do a back door, you are going to have pro rata rule problems.
Posted on 12/30/25 at 9:35 am to Big_Sur
quote:
quote:
Good answers unless OP ever wants to do backdoor Roth contributions…
I did the old employer 401k -> IRA move, then years later had to unwind that to do backdoor Roth.
Highly suggest not following the common advice in this thread and instead just let it ride where it's at. Don't move it, don't touch it. Assuming you have access to reasonable options, and especially if you have access to Fidelity Brokerage Link or similar.
Agree with you and slackster on this. I left mine at old employer. My money was right where I wanted it at super low fees. I don't need a lot of choices. I am in low cost, broad indexes that provide good diversification. And still have the flexibility of backdoor Roth for that money. I moved my wife's 401 money into an IRA and ended up placing it in very similar choices as my 401. The fees with her old 401 were not as attractive as mine.
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