A little financial advice for those leaving-

Do not make this mistake that I almost did.
You can go ahead and roll your Traditional 401K into an IRA without any issues and it has better choices, more options for getting your money in various payouts you can customize. You can also do nothing, just leave it until your ready to do something with it.

BUT DO NOT DO THIS....If you have a ROTH 401K- do NOT roll that into a Roth IRA......you are better off leaving it where it is. WHY? The 5-year clock RESTARTS when you open a new ROTH IRA to roll your money in. My advisor almost had me do that. I questioned it thank god. If you re-start the 5-year clock because you opened a new ROTH IRA for a rollover, you will not be able to withdraw any gains tax free ( you can withdraw the principal tax free) until 5 years from now. For those needing money that they don't want taxed or added to their yearly income, the ROTH is a good vehicle to stay under your goal max incomes for tax purposes and use for things like health insurance til your 65, unforeseen expenses, etc. So I'm suggesting, if you have a ROTH 401K, keep the money there. At Verizon, they allow you to roll the traditional 401k and still keep the ROTH 401k there. Good luck to all and as a former employee under 65, life has been great since leaving.

Comment! It's anonymous!

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Access traditional IRA at 59.5. Access former-employer's 401K at 55 ("rule of 55"). Can be a bad idea to convert it!

As someone mentioned, the 5-year clock starts when the ROTH account is opened. Either 401k or IRA. When you roll INTO a ROTH IRA, the clock is based on when that ROTH IRA account was opened; not when the contributions were made to the account you are rolling from.

To the question of why are people contributing to a ROTH 401k; correct, some may not be taking advantage of pre-tax up to 16% max of contributions. This could be because they think their taxes may be higher in retirement (perhaps RMDs) or their trying to create a legacy for younger generations. However, most are probably taking advantage of the mega-back door ROTH 401k. They max out pre-tax (hitting the IRS limit perhaps at 10% if they make over $230k) then contribute remaining 6% to after-tax 401k. If you do this, call fidelity and have them turn on auto-ROTH conversion. It sweeps your 401k for after-tax daily and converts it to ROTH 401k monies (so there is no gain in the after-tax 401k; otherwise, your gain in aftertax is treated as pre-tax or traditional 401k). Confusing if you're not familiar - but mega-back door ROTH contributions could add tremendous amounts (25-30k more to your 401k per year).

And another poster is correct - don't take advice from a forum and just act on it. But use the information shared to research potential benefits to your own retirement plan. What works for one person may not work for another.

how is it people are adding to roth 401k? does it mean you are not maxing out the pre-tax 16% ?

I rolled over Trad 401K to rollover IRA and did it through Fidelity when I retired. We have Vanguard 403b and Vanguard Roths but I wanted it to be seamless.

It was seamless - just the way I like it...
Fidelity offers funds from other fund families, some have a charge to do it, $75 for Vanguard but others don't $0 for T Rowe Price.

Check out your options!

News flash, we’re all leaving, some of you just don’t know it yet. Sorry.

Yes @rth+1tB1zMcd . Exactly. I did not have a ROTH IRA already open.

Roll it into an existing Roth IRA open more than 5 years.

You should have fired your financial advisor.

And no one should be taking financial advice from an anonymous forum either.

Thread regarding Verizon Communications Inc. layoffs

A little financial advice for those leaving-

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