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Rollover in-kind at Fidelity

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  • Rollover in-kind at Fidelity

    Trying to rollover my last employer 401k to new employer 401k. I do not want to use a Rollover IRA account in order to keep doing backdoor Roth. The investments in prior 401k are not all available in new 401k. Should I:
    A) sell everything in old 401k, rollover cash to new 401k and buy similar investments
    B) sell old 401k investments, buy eligible investments in old 401k, then rollover to new 401k "in-kind"

    I don't think it matters, I just have never done this before, and maybe there are unforeseen consequences from either approach. I am an index fund buy-and-hold gal, so never sold anything before. The eligible investments in new 401k are fine, just slightly different, and they align with my overall simple investment plan.
    Last edited by Cytogal; 06-01-2020, 11:59 AM.

  • #2
    It is unlikely (though not impossible) you can transfer old 401k to new in kind. Ask the appropriate people at old job. Because it’s not worth worrying about if it’s not possible.

    Question is if you’re going to have time out of the market during the transfer what if anything you’re going to do about that

    some people will shift assets around in other deferred accounts so that during the transfer their overall exposure to equities remains stable.

    others just transfer cash and don’t worry about it

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    • #3
      Originally posted by Cytogal View Post
      I do not want to use a Rollover 401k account in order to keep doing backdoor Roth.
      This sentence makes no sense.


      you have 4 choices.
      why move it at all?

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      • #4
        Originally posted by Peds View Post
        This sentence makes no sense.


        you have 4 choices.
        why move it at all?
        I thought rollover 401k account precludes doing backdoor roth due to pro rata rule, am I wrong?
        I have to move the account because old employer is closing it- long story, small business etc.
        I did ask about ability to transfer old 401k into new, and it is accepted. I am not too worried about time out of the market, long term I do not think a few weeks will make a difference.

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        • #5
          Originally posted by Cytogal View Post
          I thought rollover 401k account precludes doing backdoor roth due to pro rata rule, am I wrong?
          You are using the wrong terminology, that is why Peds has absolutely no idea what you are talking about.

          I seems pretty clear to me that you are referring to a Rollover IRA, because that is the only thing that would be subject to pro-rata treatment with a Backdoor Roth.

          Count me skeptical that no matter what you have been told you are actually able to do an in-kind 401k to 401k rollover. As jacoavlu pointed out it is extremely rare for this to be able to be accomplished even if the 401k plans are at the same custodian.

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          • #6
            Originally posted by spiritrider View Post
            You are using the wrong terminology, that is why Peds has absolutely no idea what you are talking about.

            I seems pretty clear to me that you are referring to a Rollover IRA, because that is the only thing that would be subject to pro-rata treatment with a Backdoor Roth.

            Count me skeptical that no matter what you have been told you are actually able to do an in-kind 401k to 401k rollover. As jacoavlu pointed out it is extremely rare for this to be able to be accomplished even if the 401k plans are at the same custodian.
            Yes, you are correct, my bad. I mean rollover IRA. I checked with both plan administrators, I can rollover old 401k to new 401k. Thanks for the help with terminology.

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            • #7
              I think it would be easier to track cash instead of shares (of multiple funds no less). I'd sell, move/transfer, re-buy.

              I'd only not if the time from sale to re-buy would be "long". I dunno... maybe 2 weeks or longer?
              "Oh look another bajillion point declin-Ooooh!!! A coupon for pizza!!!!" <--- This is what everyone's IPS should be. ✓✓✓

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              • #8
                “ I am not too worried about time out of the market, long term I do not think a few weeks will make a difference.”

                “A) sell everything in old 401k, rollover cash to new 401k and buy similar investments”

                Choose option A) as stated.

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                • #9
                  I would choose A), that is sell all in old 401k to cash equivalent (probably a money market fund), then transfer entire amount into new 401k cash equivalent ( eg, MMF).
                  Then buy in new 401k as if your are rebalancing for your desired overall portfolio asset allocation.

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                  • #10
                    Presumably you won't be out of the market for all that long if you sell to cash prior to rollover. Of course a lot of volatility lately so who knows what might happen. I assume you don't have a solo 401k that you could roll into?

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                    • #11
                      Originally posted by Cubicle View Post
                      I think it would be easier to track cash instead of shares (of multiple funds no less). I'd sell, move/transfer, re-buy.

                      I'd only not if the time from sale to re-buy would be "long". I dunno... maybe 2 weeks or longer?
                      It’s not only about being easier to track cash

                      the character of the funds has to be tracked as well. The lump sum transfer is actually comprised of possibly multiple “subaccounts” which may have different rules applicable to them and must be tracked. Such as pretax elective deferral, Roth deferral, safe harbor, profit sharing, voluntary after tax, pretax rollover, Roth rollover.

                      so when funds are received at final destination, the TPA has to communicate with recordkeeper as to what amounts are what.

                      that’s simpler to do without having to worry about also allocating associated earnings.

                      once they hit the new plan it may be that all that matters is pretax vs Roth.

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                      • #12
                        Similar question but didnt want to start a new thread.

                        Along these lines, my wife has a 401k through an old employer at T Rowe Price. She also has a current active solo401k at Vanguard. I was hoping to move the old 401k into the solo401k, but Vanguard says it doesnt allow this? Is this Vanguard specific or can I not combine the two at all?

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                        • #13
                          Vanguard specific that’s the reason no one should ever use Vanguard for solo 401k

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                          • #14
                            Originally posted by 8arclay View Post
                            Similar question but didnt want to start a new thread.

                            Along these lines, my wife has a 401k through an old employer at T Rowe Price. She also has a current active solo401k at Vanguard. I was hoping to move the old 401k into the solo401k, but Vanguard says it doesnt allow this? Is this Vanguard specific or can I not combine the two at all?
                            Unfortunately this is Vanguard specific. Most of the other DIY individual 401k plans (Fido, Schwab, E-Trade, TDA etc) allow incoming rollovers.

                            Comment


                            • #15
                              Originally posted by jacoavlu View Post
                              Vanguard specific that’s the reason no one should ever use Vanguard for solo 401k
                              Noted, thanks. Transfer to Fidelity it is then

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