I know that this question has been asked plenty of times, but I don't quite understand the answers. It seems that in general rolling to a traditional IRA is the best option, and then I can take advantage of some kind of Roth IRA loophole? Both ms and FB use fidelity and I assume that they are reasonably similar. Why wouldn't it be just as good to roll my ms 401k into FB 401k? If I go to a traditional IRA do I go with fidelity? What should I invest the IRA in? With great flexibility comes great responsibility. Sorry about the basic question. Any insight is appreciated. Don't know if it matters for this but TC is 330k
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If you have 2 accounts likely you pay 2 management fees. Rolling the old one over into the new one gets rid of one fee. There’s no loophole, with Roth you pay taxes now. Might worth it if you’ll have higher income when you’re old (investment). In any case you should not take financial advice from anonymous site...
The Roth IRA loophole you're probably talking about is more commonly known as backdoor Roth IRA. If Facebook offers it, then you can take advantage of it regardless of whether you move your MS 401k or not. It's a completely independent thing. To decide whether to roll or not, consider: 1) Will you be picking the funds to invest in or just leave it in some target retirement fund? If you are, then see which one offers better options. 2) if you plan to take a loan against your 401k, you can only do it again to the account that's tied to your current employer. The loan limit is half your balance, capped at 50k. So, if you want to take a loan that's more than half your balance at the FB 401k, you might want to rollover your MS one into the FB one.
This is incorrect. If you roll to an IRA and you do a backdoor Roth IRA then with pro-rata rule you have to pay taxes on converting the IRA. If you don’t use backdoor or mega backdoor Roth IRA then roll to a TIRA for more fund options. Otherwise leave in MSFT or roll to Facebook 401k Correction: pro-rata from rolling to TIRA would affect normal backdoor Roth IRA, but mega backdoor is unaffected I believe
I stand corrected re: backdoor IRA being tied to your employer's plan. It's independent. This was a pretty decent read: https://www.rothira.com/what-is-a-backdoor-roth-ira
The default solution is to just open an IRA with whoever you have a personal trading account with, and put it all in a Vanguard target fund.
So how is that different than rolling it to my Facebook 401k that is set to a vanguard target fund. Are there different tax implications?
It's the same basic deal. Minor practical benefits in that you can take time off between jobs or freelance for a bit if you want (opening an IRA while "unemployed" is a pain), you don't have to do this dance every time you switch jobs, and you might get higher reward tiers from your financial institution.
Same boat as you, looked into it extensively. They both offer brokerage option, effectively making them the same. Msft doesn't charge fees. No reason to combine other than simplifying. That said, I combine them into FB because I wanted to be able to leverage the amount I have in the Microsoft account against a 401k loan two Bridge finance a home. Facebook rules basically make getting the maximum 50K as leverage and use in the loan more difficult to obtain if you only have started with Facebook in the past year. By rolling over your Microsoft into the Facebook you instantly are able to Leverage the value of the Microsoft as Facebook doesn't discriminate this as 50% vested, they consider it money that can be immediately used against a 401k. In short if you don't want to dick around keep them separate, if you think you'll ever need to take a 401k loan out in the next year combined them now and save yourself the headache later. In terms of investing options they are equal
Compare the fund offerings between MSFT and FB. They should be similar so won't matter much. If you keep MSFT's you can manage both with same Fidelity login. Keep it in a 401k instead of a rollover IRA so you have the option to do a backdoor Roth without hitting the pro-rata rule.
Worst part of Amazon: no mega backdoor Roth.