Rollover 401k in combination with Roth IRA investment

Investing
#1

Hello Jeremy,
Thank you so much for all the insight you share - I have learned so much from your class with recommendations and easy to understand approach! I have a question about my 401k rollover and would love your thoughts.

I have my entire 401k amount in MVP (15 years of investing) and my employer just merged with a hospital system that changed our investment company to Transamerica so now I am making contributions to that company. I do max out my 401k and Roth IRA every year and my Roth is with Raymond James. I also just opened a personal brokerage account last month after listening to your recommendations. The question is what to do with the old 401k:

  1. Rollover to new 401k (Vanguard target date 0.15%)
  2. Rollover to new IRA that I manage myself (VSTAX 0.04% or FZROX 0%)

Does the pro rata rule come into affect with any of this and will that affect future Roth contributions? Should I also transfer my Roth IRA from RJ to my own personal account to help with fees? It makes me nervous to personally manage everything when I feel I am just learning all of this and that is why I have kept the account as is at the moment. Thank you so much!

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#2

If you’re doing backdoor Roth IRAs, then you might want to leave that old 401K where it is or roll it over to your new 401k (whichever has lower fees) as that would avoid the pro-rata rule. If you’re not doing a backdoor Roth IRA, I’d definitely roll it over to your own IRA with Vanguard or Fidelity and invest in low fee index funds!

And yeah, if you’re still nervous to self-manage, then there’s no rush or harm in leaving things as they are for a while. Open your own new account, invest a small amount for a few months until you feel confident enough to move the bigger money! :slight_smile:

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#3

Jeremy, THANK YOU!!!