RJParticipantStatus: PhysicianPosts: 124Joined: 01/09/2016
Hello, I hope to get some advice on my situation. I am switching employers and for certain reasons can’t roll over my old job’s 401k to new job’s retirement plan. I have to roll it into an IRA at my bank, B of A. I also do yearly Backdoor Roth IRA conversions with Vanguard. What are the implications of having a traditional IRA with B of A? Am I no longer allowed to do Backdoor Roth? What about the money that’s already there?
Thanks in advance.December 3, 2018 at 3:05 pm MST #171501PedsParticipantStatus: PhysicianPosts: 2110Joined: 01/08/2016
How big is it?
You could just leave it alone as well.
Search my posts for 4 things to do with old retirement plans.December 3, 2018 at 3:33 pm MST #171506RJParticipantStatus: PhysicianPosts: 124Joined: 01/09/2016
Thank you so much for quick reply. Complicating issue is that I am also currently doing a refi of my primary residence. I am getting a great deal on interest rate, but part of the deal I have to bring in a certain amount of new money to the bank to establish relationship. Old 401k seems perfect. Does pro-rata apply to new contributions to backdoor roth only?December 3, 2018 at 3:46 pm MST #171510jacoavluModeratorStatus: PhysicianPosts: 1202Joined: 03/01/2018
Future Roth conversions would be pro rata in any year you have a non zero balance on 12/31 across traditional, SEP, and Simple IRA accounts.
Download IRS form 8606 and work through the form and plug in your own numbers and you’ll see the effects.
The Finance Buff's solo 401k contribution spreadsheet: https://goo.gl/6cZKVAspiritriderParticipantStatus: Small Business OwnerPosts: 1263Joined: 02/01/2016
Does your previous employer allow for partial withdrawals If so, you could just withdraw directly from the 401k, with no need to rollover to an IRA. The distribution would be subject to 20% tax withholding,
If you are in a lower tax bracket or otherwise do not need the witholding, you could rollover to an IRA just the amount you need and withdraw with less or $0 withholding. Just remember we are getting close to the end of the year. You don’t want the rollover sitting there on 12/31.December 5, 2018 at 7:50 am MST #171785jfoxcpacfpModeratorStatus: Financial Advisor, Accountant, Small Business OwnerPosts: 6148Joined: 01/09/2016
As @peds said, you can always leave your 401k with your prior employer – and lobby to get your new employer’s plan document changed to accept rollovers. It’s uncommon, but not all plans accept incoming rollovers, probably to reduce complexity of plan management.
You can always do a backdoor Roth, however. You’ll pay pro-rata tax – which is an early payment of tax you’ll pay on your pre-tax plan assets at some point, anyway. I used to counsel folks to avoid it. Now, I’m Switzerland.
Johanna Fox Turner, CPA, CFP, Fox Wealth Mgmt & Fox CPAs ~ 270-247-0555
https://fox-cpas.com/for-doctors-only/December 5, 2018 at 7:53 am MST #171787