Consolidating two small 401ks?

[goldenmustache2]

I have done some job hopping recently, and have the following 401ks:

Company A:  ~660K
Company B:  ~1.8K
Company C (current employer):  ~3.8K

All of the plans have reasonable investment choices and expenses.  I am planning to leave A alone, and rollover B to C.  I have to do something with B as I am under the 5K limit they have for maintaining a 401k with their plan.  I can't think of any reason not to do a rollover but wanted to double-check?  I have already done a backdoor Roth conversion from an IRA this year, but since this is 401k to 401k there is no interference right?

[HPstache]

I do not believe you can roll one 401K into another.  You'll have to roll it into an appropriate IRA.  I would also recommend rolling company A 401K into an IRA...  Best to cut ties with your old company's 401K program and take complete control in an IRA.

[mckaylabaloney]

I do not believe you can roll one 401K into another.  You'll have to roll it into an appropriate IRA.  I would also recommend rolling company A 401K into an IRA...  Best to cut ties with your old company's 401K program and take complete control in an IRA.

That's not correct; you can roll an old 401(k) into your current company's 401(k).

OP, if you do backdoor Roths, you're right that you should not be rolling anything into a traditional IRA. I would do the same thing you are doing: roll at least company B into company C (and I would consider rolling over company A as well for simplicity). Typically, the main reason not to roll over an old 401(k) is if it has better terms and investment options than your new 401(k). If your new 401(k) is just as good, the only reason not to do a rollover AFAIK would be the hassle (also, sometimes your funds will be out of the market for a few weeks while the rollover is in process).

Personally, I have an old 401(k) I'm not moving because (1) I also do backdoor Roths, so won't roll into an IRA, and (2) my old 401(k) has slightly better/cheaper investment options than my current one (namely, access to VINIX). My current 401(k) also has pretty good and inexpensive investment options so it wouldn't be crazy to consolidate them for the simplicity (and ability to completely cut ties with my former employer), but to date I haven't concluded that it's worth the hassle.

[HPstache]

I do not believe you can roll one 401K into another.  You'll have to roll it into an appropriate IRA.  I would also recommend rolling company A 401K into an IRA...  Best to cut ties with your old company's 401K program and take complete control in an IRA.

That's not correct; you can roll an old 401(k) into your current company's 401(k).

OP, if you do backdoor Roths, you're right that you should not be rolling anything into a traditional IRA. I would do the same thing you are doing: roll at least company B into company C (and I would consider rolling over company A as well for simplicity). Typically, the main reason not to roll over an old 401(k) is if it has better terms and investment options than your new 401(k). If your new 401(k) is just as good, the only reason not to do a rollover AFAIK would be the hassle (also, sometimes your funds will be out of the market for a few weeks while the rollover is in process).

Personally, I have an old 401(k) I'm not moving because (1) I also do backdoor Roths, so won't roll into an IRA, and (2) my old 401(k) has slightly better/cheaper investment options than my current one (namely, access to VINIX). My current 401(k) also has pretty good and inexpensive investment options so it wouldn't be crazy to consolidate them for the simplicity (and ability to completely cut ties with my former employer), but to date I haven't concluded that it's worth the hassle.

My apologies, thanks for the clarification.  I either misunderstood or my company had a special policy to not allow 401K rollovers from previous employers.

[PDXTabs]

My apologies, thanks for the clarification.  I either misunderstood or my company had a special policy to not allow 401K rollovers from previous employers.

Yup, according to the IRS they are allowed to but not required to accept rollovers:
https://www.irs.gov/retirement-plans/plan-participant-employee/rollovers-of-retirement-plan-and-ira-distributions

Here is the chart of what they are allowed to do:
https://www.irs.gov/pub/irs-tege/rollover_chart.pdf

But the above chart is a little wrong, in the sense that you can absolutely roll over a "conduit IRA" into a 401k. In fact, this says that you can roll over any IRA that doesn't include after tax contributions:
https://www.irs.gov/pub/irs-news/fs-03-04.pdf

But again, it depends on the employer. My old employer would only accept conduit IRA rollovers.

[MoseyingAlong]

....  I would also recommend rolling company A 401K into an IRA...  Best to cut ties with your old company's 401K program and take complete control in an IRA.

Besides the possible impact on backdoor Roths or regular Roth conversions, I recommend determining the asset protection features of different retirement accounts for the state you currently live or plan to live in later. In some states, a 401k provides more protection than an IRA. This is more applicable to large accounts which I would start looking at about $500K.

Caveats: Some of this depends on your liability exposure whether the hassle is worthwhile. Plus your insurance coverage.

Here's one link. I don't vouch for the accuracy but it's a place to start.
https://www.irafinancialgroup.com/learn-more/self-directed-ira/ira-asset-and-creditor-protection/

[terran]

If the Company C plan has good investment options I'd roll both A and B to it just so you have everything together and don't continue to collect orphan 401(k)s. If the company A plan has better investment options then I'd probably leave it there for now, though. As long as you have a $0 balance in any previously deducted traditional IRA (including rollovers from these or any other plan) on December 31st your backdoor Roth for this year will be fine, so rolling over directly to the current company plan is a good idea.