Author Topic: Roll over old 401k to tIRA or new solo 401k?  (Read 396 times)

Freedom2016

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Roll over old 401k to tIRA or new solo 401k?
« on: February 05, 2020, 11:47:03 AM »
My old employer is terminating their Fidelity 401k plan, in which I have a lot of assets (in VTSAX and FXNAX). I will thus need to roll over that money and I have two options: roll over to an existing Vanguard tIRA; or roll over to a new Vanguard solo 401k that I set up a few months ago but haven't started funding.

Any pros/cons to consider re IRA vs. solo 401k?


terran

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Re: Roll over old 401k to tIRA or new solo 401k?
« Reply #1 on: February 05, 2020, 12:22:47 PM »
The only con I can think of to rolling over to an IRA is that it will cause issues if you want to make a backdoor Roth contribution, so if your income is too high to make direct Roth contributions and you don't already have a previously deducted traditional IRA then I would avoid it.

The only general con to rolling over to a solo 401(k) that I can think of is that once it has $250k in it there's a form you have to fill out every year or face harsh penalties, but my understanding is that the form isn't too bad. For the Vanguard solo 401(k) specifically my understanding was that the investment options weren't as good as what's available in an IRA (or other company's solo 401(k)s), but that might have changed since Vanguard got rid of investor class shares.

Vanguard doesn't allow rollovers from IRAs in to their solo 401(k), so you'll want to double check that they'll allow them from a 401(k). If not there are plenty of other good options that do.

bacchi

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Re: Roll over old 401k to tIRA or new solo 401k?
« Reply #2 on: February 05, 2020, 12:29:11 PM »
What Terran wrote:

The >$250k form is easy but the penalty for missing it is harsh ($500). It's due in July (August?) of each year.

Vanguard solo 401ks now use advisor funds but those are the only choices. No ETFs, for example.

Freedom2016

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Re: Roll over old 401k to tIRA or new solo 401k?
« Reply #3 on: February 06, 2020, 12:48:29 PM »
Thanks for the advice. Decided to roll over into my IRA.

Went to a Fidelity office because brick and mortar customer service, whee!

And at the Fidelity brick and mortar office, they told me that they can't help me with the 401k roll over, they literally cannot even print me off the paperwork I need to fill out, because the Fidelity offices handle personal investments, not company plans. I have to call a Fidelity 800 number to do it.

GAH.