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Learning, Sharing, and Teaching => Investor Alley => Topic started by: Road2Freedom on September 17, 2018, 11:14:57 AM

Title: Rollover IRA or rollover to 401K?
Post by: Road2Freedom on September 17, 2018, 11:14:57 AM
My wife started a new job about a month ago and we kept her investments in her former employers' 401k.  My initial thought was to add it to her Rollover IRA we have a Fidelity, but I realized it may make more sense to roll it into her new employers' 401k to have access to it (without paying a penalty) if she were to retire between 55 - 59-1/2.

Would be putting it into index funds either way, but her employer's ER would be .045 versus Fidelity at .015.

Am I thinking correctly on this or possibly missing something?

EDIT:  Not sure if it matters but the amount is about $157K.
Title: Re: Rollover IRA or rollover to 401K?
Post by: RWD on September 17, 2018, 11:45:36 AM
Doesn't a 401k have the same penalties as an IRA?

Have you seen this thread?
https://forum.mrmoneymustache.com/investor-alley/how-to-withdraw-funds-from-your-ira-and-401k-without-penalty-before-age-59-5/
Title: Re: Rollover IRA or rollover to 401K?
Post by: Road2Freedom on September 17, 2018, 11:51:15 AM
Doesn't a 401k have the same penalties as an IRA?

Have you seen this thread?
https://forum.mrmoneymustache.com/investor-alley/how-to-withdraw-funds-from-your-ira-and-401k-without-penalty-before-age-59-5/

That's what I used to think but I either read another blog (not the one below) or heard it in a podcast.  Appears you can pull from it as long as you retire the year of your 55th birthday or after.

https://www.wealthenhancement.com/blog/ins-outs-401k-withdrawals-at-age-55/
Title: Re: Rollover IRA or rollover to 401K?
Post by: terran on September 17, 2018, 12:00:07 PM
I would probably roll into the 401(k) since the ER's are really low either way and it would avoid future issues if you ever need to make backdoor roth contributions. Remember that the "age 55 rule" isn't guaranteed. It's allowed, but your employer doesn't have to allow it.  It depends on the plan.
Title: Re: Rollover IRA or rollover to 401K?
Post by: Road2Freedom on September 17, 2018, 12:14:36 PM
I would probably roll into the 401(k) since the ER's are really low either way and it would avoid future issues if you ever need to make backdoor roth contributions. Remember that the "age 55 rule" isn't guaranteed. It's allowed, but your employer doesn't have to allow it.  It depends on the plan.

Appreciate the info and didn't realize the bolded part.