I’m starting a new job soon and I’m trying to figure out what to do with my existing retirement funds. I have my pre tax 401k and a Roth 401k which I used for the mega back door through Lyft. My initial thoughts are to roll the Roth 401k into my personal Roth IRA with vanguard. However it seems if I do this I can no longer do the backdoor investment into my Roth IRA, because of the Pro Rata Rule. I also plan to roll over my Lyft pretax 401k to my new employer. Does anyone have any suggestions if this is the right way to handle my rollovers? #personalfinance #investments
That’s not what the pro rata rule is. If you are moving post tax to post tax, it doesn’t affect your ratio of pre to post tax IRA balances for when the pro rata rule would take effect. If you convert your traditional 401k into a rollover ira and leave the funds pretax, that’s when you would worry about the pro rata rule
I would move your pretax 401k to your new company’s pretax 401k (or just leave it) and either convert your Roth 401k into an IRA or leave it. Conversion should not be a taxable event.
+1 for Meta advice. r401k to rIRA would be a rollover, not a conversion as far I understand.
+1
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You should speak to your new and old retirement account custodians. Question - how do you setup a mega back door Roth IRA? Do you use a Roth 401k or post-tax contributions to your traditional 401k to roll over? Can you automate the roll over, or does this have to happen by contacting customer support or doing it online? Can you roll over employer matching contributions to your Roth IRA?
Employer match is pretax, so you can’t directly rollover to Roth IRA. You would need to convert it first and pay taxes.