Retirement plan juggling - 401k to IRA?

[ua_guy]

One of the bits of housekeeping that I need to do is move two old employer-sponsored plans I have through Fidelity into a single plan that I can manage.

The situation is:

My current plan is a 403b.

I have a 401k and a 403b from previous employers that I cannot contribute to anymore. I believe I can still invest them.

I called Fidelity and they said I should roll them to an IRA. I also have an IRA that has about $1,000 in it, so presumably I'd use that same account and just consolidate the 401k and 403b plans into it.

The Fidelity rep said it's very easy to do, they handle the moving of the funds, no cost to me, and the whole reason I'm putting it in an IRA is because I can still contribute and invest, but given my potential plans to use some of that money, it's easier to get when it's not in an active, employer-sponsored plan.

Are there any caveats or gotchas that I'm not thinking about? Is it really that easy to consolidate them? This is a traditional IRA...not Roth. I assume maximums don't apply since this transaction would be considered a rollover, and not a contribution?

Thanks for any help.

[parafly]

The process is very straightforward if you are rolling over from one tax deferred account to another tax deferred account. Your 401K, 403B, and IRA all fall into this category. In order to execute the rollovers, you will have to provide your 401K and 403B account information to Fidelity.

You are correct that the rollover transactions will not directly count toward any maximums because they are past contributions. Of course, all of the contributions you made directly into your 401K and 403B prior to the rollover will count toward maximums in the years they were made.

[kork13]

As stated, contribution limits don't apply -- this isn't a contribution, it's simply a paperwork shuffle.

The biggest "gotcha" to be careful of in 401k rollovers is that you need to make sure the 401k company divests your shares and sends the money DIRECTLY to the IRA company, not to your personal account. If it went to your personal account (or any non-IRA account), it would be considered a taxable (and penalized) sale and cause all kinds of headache (and wallet-ache). However, since your 401k, 403b, and IRA are all held by Fidelity, that shouldn't be a problem for you.

Otherwise, just be sure that you're rolling over into the same TYPE of account.... 401k/403b should both be rolled over into a traditional IRA, not a Roth IRA (unless you're okay with paying taxes on the full amount all at once).

[Diavel_guy]

I've recently cleaned up my finances myself by moving two old 401ks into a Fidelity Rollover IRA. It's easy and fidelity will handle all the paperwork for you free of charge. I liked the idea of consolidating all my old 401ks into one rollover IRA so everything is in one spot (I also have a traditional and Roth IRA with fidelity). I can also roll it into my new 401k at some point if I want to. The one downside is IRA's don't have the same legal protections from creditors that 401k's do. This varies by state so your mileage may vary.

I would add further if you roll it into a traditional or Roth IRA it's stuck like chuck there unless you want to take a tax hit. The Rollover option allows you to move it back into another 401k at some point without a tax hit. It sounds like that may not be a big deal in your case.

[jpg7n16]

The Fidelity rep said it's very easy to do, they handle the moving of the funds, no cost to me, and the whole reason I'm putting it in an IRA is because I can still contribute and invest, but given my potential plans to use some of that money, it's easier to get when it's not in an active, employer-sponsored plan.

Wait a sec? Why do you have potential plans to use your IRA money for something other than retirement?

[~bs]

Is your new 403 any good? If so I would choose that over an ira. Try reading my points in the thread in the investing forum regarding bankrupt and lawsuits.

[ua_guy]

Wait a sec? Why do you have potential plans to use your IRA money for something other than retirement?

Hookers and blow, man... that money has to come from somewhere!

Is your new 403 any good? If so I would choose that over an ira. Try reading my points in the thread in the investing forum regarding bankrupt and lawsuits.

The new 403b is very good. I don't have plans to go bankrupt (who does, right?) but if I roll it into my 403b right away, those funds become untouchable as I understand.

The IRA is a short-term strategy to keep the money invested, but also at my fingertips as I cross this particular juncture in life. Once I decide to leap or stay put, then I will roll the untouched or unused portion of those funds back into my 403b.