Author Topic: Can't rollover 401k - what to do?  (Read 1114 times)

TWStandley

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Can't rollover 401k - what to do?
« on: August 26, 2016, 12:07:12 PM »
My wife recently switched to a new employer and tried to roll over her 401k but was told that because a portion of her old employers 401k has some Roth money in there she cannot roll it over.  She has the option of leaving it with her old employer or opening an IRA with it.  What is the best option here?  FWIW, she has a balance a bit over 50k.

Thanks in advance!

andy85

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Re: Can't rollover 401k - what to do?
« Reply #1 on: August 26, 2016, 12:18:08 PM »
She probably needs to check with her former employer to see how long she can leave it open with them. Some companies require  you to move the money in a certain number of months and some companies allow the 401(k) to remain open with them indefinitely even after separation.

If she has to move it, then she should be able to roll over the roth 401k money into a roth IRA and the traditional 401k money into a traditional IRA. I'm sure a phone call to vanguard (or whoever you choose) would be extremely beneficial and informative.

If she is allowed to leave the money with her old employer then it all comes down to the fund selection. If she is in good funds with super low expense ratios, then it may be best to leave the money in the 401k. Personally, I'd just call Vanguard and have them walk me through the steps to get the money into a roth/traditional IRA.

edit: missed the part where u said she has the option to leave the money...my bad.

BlueHouse

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Re: Can't rollover 401k - what to do?
« Reply #2 on: August 26, 2016, 12:51:28 PM »
Last year I moved funds from a co-mingled account.  No one could figure out how to do it either until I picked up the phone to talk to Vanguard and then the first person on the phone told me to get out my Form 8606s to determine how much was post-tax, then I transferred that amount to a Roth IRA so that the only remaining funds in the 401k were 100% pre-tax.  Then, no problem.