What to do with rollover ira reddit

Thanks for reaching out to us on Reddit, u/V383.

You can roll a 401(k) into an existing rollover IRA. If the transaction is processed as a direct rollover, the transfer is considered non-taxable. If you convert pre-tax assets held in a 401(k) into a Roth IRA, this is considered a taxable event and you may be subject to income taxes and penalties. Please note, you must have an open IRA before initiating a 401(k) rollover online. Investment choices can vary for each 401(k) plan and in some cases the funds in your 401(k) may not be available in a Rollover IRA. If you are unable to transfer your assets over in kind from your 401(k) to an IRA, we can help you to find similar investments if you contact us and mention "Guidance" when prompted by the Virtual Assistant.

Open an account

Typically, you can initiate a rollover from your 401(k) on NetBenefits.com by visiting the "Rollovers" page located under "Quick Links" for your retirement plan. Each 401(k) plan has different rules that are established by the employer. If your plan does not allow you to process a rollover online, please contact our Workplace Services team.

I have included some additional resources below.

How to move your old 401(k) into a rollover IRA

What to do with an old 401(k)

Roth conversion

Hello guys I just wanted some options and any tips on which account I could use to open a IRA. Currently I got a new job but ain’t going to plan to stay long anyways so ima not gonna apply for there 401k. But just recently I had another job where I worked for 2 years but was laid off due to business issues and I currently still have a 401k open from my old employer. Im still young(26) and just started my career and this has never happened to me until now. My question is can I rollover my employer 401k into an IRA? As I’m not contributing to it anymore. I’ve done some research and I’ve been interested in using either Fidelity or M1 finance, which is better? I do like M1 finance user interface and there pie chart feature seems way easier to keep track of how my retirement is looking. Until I find a better job with better pay and opportunities I will eventually have another employer 401k hopefully but I feel like I do want multiple retirement accounts as the advice I hear “it’s better to diversify”. Thanks for your time.

Happy to help, u/roaf!

Traditional and Rollover IRAs are both treated as Traditional IRAs for tax purposes. The main difference between the two is that a rollover IRA is typically used to keep assets contributed to an employer-sponsored retirement plan like a 401(k) separate from personal contributions to an IRA. This can be important if you plan to roll funds back into an employer-sponsored retirement plan since some employer-sponsored plans may not accept a rollover of commingled assets.

If you'd like to keep your assets separated, then opening separate Traditional and Rollover IRAs will be easy. Simply click the link below to open new accounts with us and then initiate a transfer of assets (TOA) into the appropriate accounts.

Open an Account

Transfer an Account

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r/personalfinance

I rolled over into an IRA and purchased all dividend stocks. Last night I learned about RMDs at 72. Should I cash out now and buy them in my individual instead so I won’t be forced to at 72? I figure for tax reasons, now would be the best time. I rolled over $85k. I’m not participating in my new jobs 401k. Instead purchasing 15% of my check into dividend stocks each check. I make $43k a year. I’m 46

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level 1

No keep them in the IRA so you don't owe taxes on the dividends. When your time comes to distribute you can just transfer the stocks to your brokerage account if that's what you want to do.

level 2

Got it! You’re talking about an in-kind transfer allowing me to keep my shares intact when I transfer them over paying capital gains tax. I’m assuming I can do this multiple different years after 59 1/2 keeping my capital gains low each year leading up to my retirement age at 67.

level 2

I would love to transfer them to my Brokerage account at that time. How would the transfer at that time work? Would I have to sell off the stocks, paying the taxes owed and buying them over again? Surely they wouldn’t allow you to transfer the entire amount without paying taxes. Sorry, you through me for a loop with the concept of transferring them over when my RMD occurs. Could I initiate this same type of transfer earlier than my RMD at 67 when I’m ready to retire to live off the dividends?

level 1

If you did it in your work 401k - 1) you’d make more due to their additional matching (you are throwing money away not taking their matching funds) and 2) you are ridiculously close to dropping yourself to a 12% tax rate.

Change your strategy - do enough pre-tax 401k to drop your income below 40k (get to 12% tax rate) and then do the rest in Roth - but make sure you get that sweet sweet company matching - especially at your age!

level 2

I believe what I should do is invest in the 401k ETF at work for the tax advantage and company match and when I leave that job roll it over into my IRA buying the dividend stocks than and eventually completing an in-kind transfer to my brokerage account at retirement. Thank you!

level 2

That does sound great. My desire is to invest in Dividend stocks so that when I retire I can live off of them. My 401k of course only offers ETF’s. Any recommendations based on this thinking? Should I invest in an ETF 401k at work until I’m about to retire, roll it over into my IRA, buying the dividend stocks than and have them transferred to my brokerage account?

level 1

Option 1: roll it into a Roth and pay taxes now

Option 2: do nothing, open a Roth IRA and fund that separately.

Remember and IRA has a max contribution limit of 6k.

Why aren't you participating in the 401k?

level 2

Thank you! I was wrong not to invest in my 401k. I will be doing that now.

level 1

So I've read your replies. First you want to leverage a 401k + an IRA. The limits do not overrule each other. You can max out your IRA and your 401k every year. I have a traditional IRA, a Roth IRA, an HSA and a 401k. You cannot max both IRAs only the total limit. Since my IRA is from a previous 401k rollover I only trade individual tickers in there and do not deposit any additional money. My Roth IRA I try to max out every year and leave it in ETFs and bonds. My 401k I set on some ETFs I like and forget it. When I change jobs I roll it into my IRA. My HSA I actively use but also contribute as much as I can every year. This does not count toward your IRA limits but has a later withdrawal age. This is okay because you have more medical bills as you get older and can leverage these funds to pay medical expenses tax free.

You cant always rely on dividend stocks to continue providing dividends in the future.

level 2

A ton of valuable information here. Thank you! I will be working with this information going forward.

level 1

Always participate in 401k up to the company match. Then if eligible to a personal Roth, then if you still have money, back to the 401k. If you roll a 401k to IRA keep it seperate from other IRAs. Sometimes there are reasons to roll the rollover into the new 401k and they won't accept it if it's been combined with something else.

As you get closer to retirement you'll want some safe money, funds that won't go down the tube when the stock market drops 30% or more. These are bond funds and you'll place them in your traditional 401k or traditional IRA because they don't grow much - this is fine because when your RMD comes around you won't have to take out as much. High growth funds will go into your Roth accounts.

level 2

Thank you for all of the wonderful advice. Very helpful and new information I hadn’t thought of.