Leaving job w/401K for job w/ no 401K

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jand87
Posts: 153
Joined: Sun Oct 28, 2018 12:14 pm

Leaving job w/401K for job w/ no 401K

Post by jand87 »

Hi everyone,

Fiancé is leaving employer that hosts her 401K, balance approximately $100K, for new company that doesn't offer 401K and she will be making about $115K plus some equity.

Based on older threads and google searches, it appears leaving the 401K in place is an ideal move, so she can contribute to her IRA/Roth conversion, and then also just save money into a taxable account to replace the 401K.

Is that the optimal move for now? I had intended to just transfer the 401K to Vanguard for the simplicity and better fund choices, but I didn't know she wouldn't be able to do roth-IRA conversions anymore.

Thoughts and recommendations?

Thanks!
exodusNH
Posts: 10344
Joined: Wed Jan 06, 2021 7:21 pm

Re: Leaving job w/401K for job w/ no 401K

Post by exodusNH »

jand87 wrote: Wed Oct 20, 2021 9:57 am Hi everyone,

Fiancé is leaving employer that hosts her 401K, balance approximately $100K, for new company that doesn't offer 401K and she will be making about $115K plus some equity.

Based on older threads and google searches, it appears leaving the 401K in place is an ideal move, so she can contribute to her IRA/Roth conversion, and then also just save money into a taxable account to replace the 401K.

Is that the optimal move for now? I had intended to just transfer the 401K to Vanguard for the simplicity and better fund choices, but I didn't know she wouldn't be able to do roth-IRA conversions anymore.

Thoughts and recommendations?

Thanks!
If her current plan isn't expensive, leaving it alone for now is fine. Chances are she'll get a new job in a couple of years and can deal with it then. (Or advocate in her new job to start a 401k.) Unlike 20 years ago, there are a number of good, low-cost 401k providers now.
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Wiggums
Posts: 7050
Joined: Thu Jan 31, 2019 7:02 am

Re: Leaving job w/401K for job w/ no 401K

Post by Wiggums »

jand87 wrote: Wed Oct 20, 2021 9:57 am Hi everyone,

Fiancé is leaving employer that hosts her 401K, balance approximately $100K, for new company that doesn't offer 401K and she will be making about $115K plus some equity.

Based on older threads and google searches, it appears leaving the 401K in place is an ideal move, so she can contribute to her IRA/Roth conversion, and then also just save money into a taxable account to replace the 401K.

Is that the optimal move for now? I had intended to just transfer the 401K to Vanguard for the simplicity and better fund choices, but I didn't know she wouldn't be able to do roth-IRA conversions anymore.

Thoughts and recommendations?

Thanks!
You can do a Roth conversion at anytime. Having a rollover IRA will trigger the pro rata rules when doing a backdoor Roth. I believe that is what you’re referring to.
"I started with nothing and I still have most of it left."
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ruralavalon
Posts: 26351
Joined: Sat Feb 02, 2008 9:29 am
Location: Illinois

Re: Leaving job w/401K for job w/ no 401K

Post by ruralavalon »

jand87 wrote: Wed Oct 20, 2021 9:57 am Hi everyone,

Fiancé is leaving employer that hosts her 401K, balance approximately $100K, for new company that doesn't offer 401K and she will be making about $115K plus some equity.

Based on older threads and google searches, it appears leaving the 401K in place is an ideal move, so she can contribute to her IRA/Roth conversion, and then also just save money into a taxable account to replace the 401K.

Is that the optimal move for now? I had intended to just transfer the 401K to Vanguard for the simplicity and better fund choices, but I didn't know she wouldn't be able to do roth-IRA conversions anymore.

Thoughts and recommendations?

Thanks!
If the old employer's 401k plan offers good funds with low expense ratios, and there is no account fee fee or only a small one, then it is probably best to leave the account where it is.

What funds are offered in her employer's 401k plan? Please give fund names,tickers and expense ratios?

What is her tax bracket, both federal and state?

It is probably a bad idea to do a Roth conversion.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link: Bogleheads® investment philosophy
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