My former employment gave me three or four separate 401(k) 403 retirement accounts. Should I just continue using my present broker for them? Vanguard, Fidelity, and two more. Apart from the ease of examining them, is there another reason to combine them?
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The Rule of 55 could be a strong reason to consolidate all your accounts into your current employer’s plan if you’re approaching that age.
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I am 50 and was not aware of this rule. I’m thinking about early retirement, so this could be really helpful! Thanks for bringing it up.
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The main advantages are ease of use and possibly reduced costs. For instance, you can eliminate an outdated 401(k) that has a quarterly administrative fee by consolidating. Additionally, it’s lot simpler to keep track of everything, and you won’t have to worry about your former employer moving your money and changing record keepers. My current 401(k) is where I always combine mine.
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It might be an even better option to roll the old accounts into an IRA at Vanguard or Fidelity, where you can invest in much lower-cost index ETFs instead of paying fees at the current plans. Plus, Vanguard and Fidelity make the process really simple.
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Do not roll pre tax 401k money into an IRA if you want to preserve the backdoor Roth IRA option.
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Thus, switch to an IRA after converting to the previous 401(k) plan. It’s stupid to pay 401(k) fees from an old employer.
Otherwise, you are raising your conversion tax each year as you preserve the backdoor. If so, then keep it conventional and fuck it. which many contend is the superior tactic nevertheless.
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No, converting pre-tax funds to a Roth during prime earning years is generally not advisable. Rolling over pre-tax funds from former employer 401(k) accounts into your current employer’s 401(k) plan, rather than an IRA, can help minimize fees and preserve the option for future backdoor Roth IRA contributions in a tax-efficient manner.
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Rollover to a IRA. It is super simple
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I always consolidate with my current employer’s plan. Some companies charge fees for former employees, so it’s a good way to avoid that.
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The decision depends on the available funds. If your current 401k offers better options, rolling it over could make sense. If not, you might want to leave it where it is. Also, remember that you have the option to roll over old 401ks into an IRA, which can provide more flexibility based on the firm you choose.
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Roll them. Some are simpler than others. My first required me to essentially pay it out and then provide a certified check to the new business. They can be automatically transferred by others.
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I roll my old accounts into Fidelity because I prefer not having to manage multiple accounts and logins. Plus, some of my previous accounts significantly increased their fees after I left the company.