Hello all! I am moving to a new company ( Amazon) in a couple of weeks and was wondering what my options are in terms of the 401K I have with my current employer. Should I just rollover my entire 401K to Amazon ( I think both NXP and Amazon use Fidelity) or should I do an IRA? I have also heard about a mega backdoor IRA. Can someone explain how that works at Amazon? Any help is greatly appreciated! Mandatory blind tax -New TC - 164K, YOE - 2 #tech #401K #investments #retirement #amazon #rollover
Recommend #2 as well but wait will you are in Amazon 401k and happy with fund choices before moving old in one over. Though Amazon is fidelity fund choices are legacy from Vanguard days, ie can't think of a fidelity mutual fund as a choice.
Thanks for the inputs! How has your experience been with Amazon's 401K. I mean they only match 2% if you put in 4%. But what has your rate of return been? My rate of return at NXP has been around 14% per year.
If you want to manage the money, roll it to an IRA and you can invest in anything you want. If you like the funds in the 401k, then you can just roll it into your new 401k. BUT, 401k usually don't have very good fund options beside index funds.... So, you may ended up with brokerageLINK in fidelity 401k plan and buy normal stock and ETFs. For me, rolling to external 401k is better option.
Do nothing may be best, just make sure the old one isn't set for liquidation. If you leave Amazon and your account is below 1k, it'll be liquidated and you'll be sent a check.
So you mean, have the NXP 401K as it is and not roll it over to Amazon? And then start a new one at Amazon? Also, how's your rate of return been at Amazon's 401K historically?
Yes. Check the fees of the old plan. If it's not too much, simply leave it alone. Amazon 401k plan is really bad; most other plans of tech companies allow you to buy ETF and individual stocks through 401k BrokerageLink; Amazon does not, even though many people complain about the issue. Unless your plan is worse, I wouldn't rollover. In any case, don't rush with decision, as it cannot be undone. I would re-evaluate at 1 year mark.
Here are your options: 1. Do nothing 2. Roll old 401k into new one 3. Roll old plan into IRA Once you do 401k->IRA you can’t reverse it. I’d personally do #2 over #3 at least for now. If your old plan has fees do #2 for sure. Mega Backdoor is when you roll your post tax contribution into your Roth 401k. This allows you to exceed the 19500 limit. Generally Roth is better early career for reasons which go beyond the scope of your question. Backdoor IRA is a concept separate from your employer 401k. You basically contribute to a Traditional IRA and then convert it to a Roth.
Thank you so much for the detailed explanation! Really appreciate it! I'm inclined towards just rolling it over to Amazon 401K and let it rip. Alternatively, as another commenter suggested, wait a month to see Amazon's 401K ins and outs and then pull the plug.