Current 401K Coming to an End

[Bogart99]

I currently have a 401k with T Rowe Price with about $265K. My company just got purchased and the acquiring company's plan is through Empower. My current 401K is going to come to an end in the next month and I need to figure out what to do. I would like to eventually have most of my investment accounts with Vanguard. Should I setup a Traditional IRA with Vanguard and roll my current 401K to that account? Then I could start a new 401K account under the new employer plan and roll that over to the Traditional IRA when I leave the company in a few years. I currently have a Roth IRA at Fidelity that I would like to also move to Vanguard at some point.

[maizefolk]

The only downside to doing this would be if you currently use the backdoor Roth contribution strategy or think you might do so in the future. Assuming you don't, I see no problems with your proposed plan.

[Frankies Girl]

One other reason to leave the 401k as is (even if you move it to Vanguard) is for protection from lawsuits/judgements. Some states offer higher levels of protection of assets that are in an 401k/workplace type of accounts as opposed to IRAs. I'd consider that before converting to an IRA.

If it was me, and the protections in my state were not any different, I would do a rollover IRA to Vanguard if that's where it made sense to go to, and do the workplace 401k as you propose with the new plan and (rolling it after leaving the workplace).

[Bogart99]

Okay. I'm currently 43 and plan to work another 3-7 years unless the new employer decides to get rid of me. I would like to look at doing a Roth conversion after I stop working. I also live in Texas.

[maizefolk]

Okay. I'm currently 43 and plan to work another 3-7 years unless the new employer decides to get rid of me. I would like to look at doing a Roth conversion after I stop working. I also live in Texas.

Roth conversions are actually okay even if you have a bunch of money in traditional IRAs. You'll have to pay the taxes anyway.

Backdoor Roth is a different process to effectively let you contribute the normal annual IRA amount to a Roth IRA even if you're above the income limit to contribute directly to a Roth IRA. Only feasible if you don't have much money in existing traditional IRA accounts.

[ChpBstrd]

I would like to eventually have most of my investment accounts with Vanguard. Should I setup a Traditional IRA with Vanguard and roll my current 401K to that account?

I went through a 401k vendor change in Jan 2020 and tried my best to do a rollover into my brokerage traditional IRA. However I was informed that I could not because a vendor change is not a qualifying event. You’re out of luck unless you can talk your employer into firing and rehiring you, or making you a contractor.

[Bogart99]

That is a good point. We have not received the details yet.