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  • Question about 401k rollover

    Greetings everyone,

    I just finished residency and have a little over 6000 in a 401K through Wells Fargo.  I am 1099 IC with my new position.  I plan to use Vanguard as much as possible.  They won't allow a rollover to an individual 401K.  They will allow rollover to an IRA but I want to be able to utilize backdoor roth so the money will have to be moved out of the IRA after it is rolled over.  I have considered moving it to my Roth IRA and paying the taxes but the amount exceeds the annual contribution amount.  I've also thought about just leaving it with Wells Fargo.  Any other options or things to consider?

     

    Thank you in advance.

  • #2
    Go with fidelity for your a solo 401k

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    • #3
      You’ve discovered one of the pitfalls of Vanguard Solo 401(k)s. They will not accept rollovers from other retirement plans.

      As Pierre mentioned, Fidelity has a very good Solo401(k) plan and offers many low-cost index fund options. And, they allow rollovers of old plans.

      The other option, as you alluded to, is to simply pay the conversion tax to roll your old plan directly into a Roth IRA. This is probably the best option, if your determined to use Vanguard for your Solo 401(k).

      Comment


      • #4
        I agree in principle with @pierre. There is no longer any compelling reason to use Vanguard for a one-participant 401k. I would just expand the options to Etrade, Fidelity and TD Ameritrade. They are all very viable low-cost options depending on personal choice.

        One correction to the original post. Roth conversions or any other IRA rollover never are considered regular IRA contributions and are not included in the contribution limit.

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        • #5




          Greetings everyone,

          I just finished residency and have a little over 6000 in a 401K through Wells Fargo.  I am 1099 IC with my new position.  I plan to use Vanguard as much as possible.  They won’t allow a rollover to an individual 401K.  They will allow rollover to an IRA but I want to be able to utilize backdoor roth so the money will have to be moved out of the IRA after it is rolled over.  I have considered moving it to my Roth IRA and paying the taxes but the amount exceeds the annual contribution amount.  I’ve also thought about just leaving it with Wells Fargo.  Any other options or things to consider?

           

          Thank you in advance.
          Click to expand...


          convert it. this is your lowest tax bracket for a while.

          Comment


          • #6
            Thanks all! I will check out the other suggested companies. I didn't realize the contribution limit didn't apply to rollovers.

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