Question about a 401k/taxes after switching companies

You can no longer contribute to 401K from a previous employer. You need to open an IRA and start dumping money there.

It's also recommended that you roll the 401K into that account as well, so you will have control of it.

quote:

---

But you'll pay taxes on the 401K rollover if you do that.

---

not if you roll into a traditional IRA

you would only pay tax if you rolled it into a ROTH IRA, assuming your existing 401K is not Roth funds

You can create one at fidelity, or any other company/bank that carries them. I have heard Fidelity has some really good fund options, so if it’s easier for you, you can go with them.

You can discuss w the account rep at Fidelity, and they can handle the paperwork and the roll it over (so would other advisor/investment groups)

The rollover does not count towards your annual contributions, so you can still contribute this year. And to answer your question in the OP, since you’d be paying with after tax dollars there is an adjustment on the return that would allow you to reduce your taxable income.

quote:

---

so I'll need to create a traditional IRA then move the existing funds into it.

---

You'll need to create a "rollover ira" and transfer 401k into that. Fidelity has a nice page explaining your options for a 401k.

https://www.fidelity.com/building-savings/learn-about-iras/401k-rollover-options

quote:

---

But you'll pay taxes on the 401K rollover if you do that. Your tax rate today might be much higher than at retirement. I'd leave it in the Fidelity 401K at least for now, while you ponder the right approach for you.

---

OP, please just don't listen to this dumbass.

WG, what previous posters are taking about is you rolling 401k funds into a Fidelity Self Directed IRA. Seems you have limited knowledge, but keeping learning. I would suggest that you call Fidelity and talk to an agent, or just drop in one of their offices and talk to someone. Basically, Fidelity will get the 401k information from you, you'll fill out forms for new account and authorizing Fidelity to talk to 401k company. 401k company and Fidelity will work together to move your 401k money to your new self directed IRA.
After creating the new Fidelity account, you can trade and invest as you please.
I hope this helps you. About 30 years ago I was in a similar position as you. I'm now in early 60s, been retired a couple of years, and no financial worries.

BTW, roll over ira is what you would be doing, and creating the self directed ira account.

quote:

---

I would also recommend OP to consider opening both traditional IRA and a Roth IRA and fund both.

---

Just remember the annual contribution limit applied to both types. You only get one limit to spread out.

OP, please meet with a Fidelity representative. You’re getting all kinds of advice here that could just confuse you. Bottom line:
-401k gets rolled over into a traditional IRA. You won’t pay taxes on this event.
-If you are planning after tax contributions moving forward, that should be put into a Roth. This is where it’s important to talk to Fidelity. If your planning to reduce your tax burden by using “after tax” money to contribute to the Traditional IRA, then you really need to work with them to understand that financial impact of that vs a Roth.

One can make withdrawals from both an IRA and a 401k penalty free at 59.5.

But I agree that it wouldn’t hurt for him to discuss his overall situation with an advisor.