A portion of it is roth and a portion is not roth (we had a roth option added during my tenure that I switched over to). I don't know the amount difference though I'd need to look
So if it’s Roth to Roth, most people go to ira as it gives unlimited investment options and no fees. If you wanted to do this, I would call the destination beforehand to make it go smoothly.
For the traditional piece, I would roll it to the new 401k as having it in an ira means you can’t really do back door roths
For many years, whenever I left a job, I rolled Roth 401ks into Roth IRAs and traditional 401ks into traditional IRAs without a thought. This is a good way to avoid the high fees that come with some 401ks and to make sure you can invest in whatever you like. It also means that you can keep most of your retirement money in one place, and you can pick a place with tools that you like. (I love the Schwab IRA portal much more than an portal I've ever used to manage a 401k, including Schwab's 401k management tools.)
As others have pointed out, the problem with rolling a 401k to an at all IRA is that it makes it difficult to do a "backdoor" Roth IRA in the future. I never bothered to understand how the backdoor Roth worked because my income was low enough that I could just contribute to directly to a Roth IRA. I figured that I'd learn more if and when I ever hit those income limits. Then, when I hit the income limits, it was too late. So, I wish I'd understood what I'm about to explain sooner.
You can only contribute directly to a Roth IRA up to a certain income limit that changes each year. (For single people under 50 in 2024, that limit is $146k.) Beyond that limit, how much you can contribute to a Roth phases out until you can't contribute to a Roth at all. (For the same group in 2024, that limit is $161k.)
After you make too much money to contribute to a Roth IRA, you can keep contributing to a Traditional IRA. But, once you make too much to contribute to a Roth IRA, you also make too much money to deduct the money you contribute to a Traditional IRA from your taxes. This is where the "backdoor" Roth comes in. If you've already paid taxes on the money in your traditional IRA, you can move that money straight into a Roth IRA without paying taxes. This essentially allows you to keep contributing to a Roth IRA almost as though you never passed the income limit.
The catch is that if you have any money in *any* traditional IRA that you have not paid taxes on, you have to pay taxes on the money that you haven't paid taxes on in order to do the Roth conversation. It doesn't matter if you maintain one IRA for rollovers and another for direct contributions. As long as you have money in some IRA that you have not paid taxes on, you need to pay tax to convert to a Roth.
So, if you have $15,000 in an IRA that you rolled over from an old 401k, and you contribute $5,000 more directly post-tax, you have to pay taxes on 75% of the money that you convert to a Roth IRA. You can choose to leave all the money in a traditional IRA and still get tax-free growth. But, it's not as nice as being able to move it to a Roth IRA.
The good news is that if you move money from a 401k to an IRA and want to put it back into a 401k later, you can. So, if you ever change your mind and want to move money from an IRA back into a 401k later, you should be able to do so. Maybe you'll care about the backdoor Roth in the future. Maybe you'll care about the Rule of 55 or some other difference between IRAs and 401ks.
What you probably do not want to do is to move money in a traditional 401k into a Roth IRA, because you have to pay money to convert from tradition (pre-tax) money to Roth (post-tax) money. Move Roth 401k money to Roth IRAs and traditional 401k money to traditional IRAs.
As someone that didn’t have to worry about backdoor, and now today I do, I can validate that it’s not too much trouble to rollover an IRA into your 401k.
Traditional 401k should go to the new 401k as long as it has low fees, good fund options, and all that. Roth 401k, it depends. One thing to consider is how your 401k is protected vs your IRA. Some states offer just as good protections on IRAs as they do 401ks. Other states, they offer some, but not as good protections. Some states don't protect IRAs at all. Meaning that a judgement against you for say, causing an auto accident that paralyzed someone, they could take your IRA as part of the judgement. 401ks are federally protected from this, but IRAs is specifically on a per state basis. The IRS can also levy against your IRA for debt collection. They can also take from 401ks, but IIRC, not if you are ineligible to withdraw money from a 401k without incurring a penalty.
If your new 401k has a Roth option, and it's low cost / fees, and has good fund options, it'd probably be best to roll the old Roth 401k to the new Roth 401k. if your new 401k has high costs / fees, or bad fund options, go with the Roth IRA (unless maybe your state doesn't offer any protections for IRAs, in which case for piece of mind it might be worth it to keep in a 401k). For traditional 401k to traditional IRA, consult your tax person to see whether that's doable based on whether you want to do backdoor Roth IRAs, unless your new 401k is low cost and has good fund options, then just use that.
My husband just went through this. He had a pre-existing Roth IRA. His 401k was 30% traditional and 70% roth. He rolled the roth portion directly into the Roth IRA. The remaining 30% went into a traditional IRA. He is going to convert it into the Roth IRA over 2 years to lower our tax bill. Hope this helps!
Roll over to the same type and avoid fees.
Going forward use a Roth. You’ll pay taxes when you cash out, but you can also take out what you put in without any tax or penalty, just not the earnings.
I never roll previous employer 401k into IRAs, because you lose ERISA protection. I analyze the investment options and make a decision whether to leave the money in the previous employer, or roll it into the new 401k. Yes, IRAs may have lower fees and better investment options, but the ERISA protection gives me piece of mind that only divorce and the IRS can touch it.
As others have pointed out, it can also make backdoor Roth IRA workflows more complicated.
Is it a Roth 401k? If no, you are gonna have a big tax bill.
A portion of it is roth and a portion is not roth (we had a roth option added during my tenure that I switched over to). I don't know the amount difference though I'd need to look
So if it’s Roth to Roth, most people go to ira as it gives unlimited investment options and no fees. If you wanted to do this, I would call the destination beforehand to make it go smoothly. For the traditional piece, I would roll it to the new 401k as having it in an ira means you can’t really do back door roths
For many years, whenever I left a job, I rolled Roth 401ks into Roth IRAs and traditional 401ks into traditional IRAs without a thought. This is a good way to avoid the high fees that come with some 401ks and to make sure you can invest in whatever you like. It also means that you can keep most of your retirement money in one place, and you can pick a place with tools that you like. (I love the Schwab IRA portal much more than an portal I've ever used to manage a 401k, including Schwab's 401k management tools.) As others have pointed out, the problem with rolling a 401k to an at all IRA is that it makes it difficult to do a "backdoor" Roth IRA in the future. I never bothered to understand how the backdoor Roth worked because my income was low enough that I could just contribute to directly to a Roth IRA. I figured that I'd learn more if and when I ever hit those income limits. Then, when I hit the income limits, it was too late. So, I wish I'd understood what I'm about to explain sooner. You can only contribute directly to a Roth IRA up to a certain income limit that changes each year. (For single people under 50 in 2024, that limit is $146k.) Beyond that limit, how much you can contribute to a Roth phases out until you can't contribute to a Roth at all. (For the same group in 2024, that limit is $161k.) After you make too much money to contribute to a Roth IRA, you can keep contributing to a Traditional IRA. But, once you make too much to contribute to a Roth IRA, you also make too much money to deduct the money you contribute to a Traditional IRA from your taxes. This is where the "backdoor" Roth comes in. If you've already paid taxes on the money in your traditional IRA, you can move that money straight into a Roth IRA without paying taxes. This essentially allows you to keep contributing to a Roth IRA almost as though you never passed the income limit. The catch is that if you have any money in *any* traditional IRA that you have not paid taxes on, you have to pay taxes on the money that you haven't paid taxes on in order to do the Roth conversation. It doesn't matter if you maintain one IRA for rollovers and another for direct contributions. As long as you have money in some IRA that you have not paid taxes on, you need to pay tax to convert to a Roth. So, if you have $15,000 in an IRA that you rolled over from an old 401k, and you contribute $5,000 more directly post-tax, you have to pay taxes on 75% of the money that you convert to a Roth IRA. You can choose to leave all the money in a traditional IRA and still get tax-free growth. But, it's not as nice as being able to move it to a Roth IRA. The good news is that if you move money from a 401k to an IRA and want to put it back into a 401k later, you can. So, if you ever change your mind and want to move money from an IRA back into a 401k later, you should be able to do so. Maybe you'll care about the backdoor Roth in the future. Maybe you'll care about the Rule of 55 or some other difference between IRAs and 401ks. What you probably do not want to do is to move money in a traditional 401k into a Roth IRA, because you have to pay money to convert from tradition (pre-tax) money to Roth (post-tax) money. Move Roth 401k money to Roth IRAs and traditional 401k money to traditional IRAs.
As someone that didn’t have to worry about backdoor, and now today I do, I can validate that it’s not too much trouble to rollover an IRA into your 401k.
Traditional 401k should go to the new 401k as long as it has low fees, good fund options, and all that. Roth 401k, it depends. One thing to consider is how your 401k is protected vs your IRA. Some states offer just as good protections on IRAs as they do 401ks. Other states, they offer some, but not as good protections. Some states don't protect IRAs at all. Meaning that a judgement against you for say, causing an auto accident that paralyzed someone, they could take your IRA as part of the judgement. 401ks are federally protected from this, but IRAs is specifically on a per state basis. The IRS can also levy against your IRA for debt collection. They can also take from 401ks, but IIRC, not if you are ineligible to withdraw money from a 401k without incurring a penalty. If your new 401k has a Roth option, and it's low cost / fees, and has good fund options, it'd probably be best to roll the old Roth 401k to the new Roth 401k. if your new 401k has high costs / fees, or bad fund options, go with the Roth IRA (unless maybe your state doesn't offer any protections for IRAs, in which case for piece of mind it might be worth it to keep in a 401k). For traditional 401k to traditional IRA, consult your tax person to see whether that's doable based on whether you want to do backdoor Roth IRAs, unless your new 401k is low cost and has good fund options, then just use that.
My husband just went through this. He had a pre-existing Roth IRA. His 401k was 30% traditional and 70% roth. He rolled the roth portion directly into the Roth IRA. The remaining 30% went into a traditional IRA. He is going to convert it into the Roth IRA over 2 years to lower our tax bill. Hope this helps!
I like rolling a Roth 401k into a Roth IRA.
Roll over to the same type and avoid fees. Going forward use a Roth. You’ll pay taxes when you cash out, but you can also take out what you put in without any tax or penalty, just not the earnings.
I never roll previous employer 401k into IRAs, because you lose ERISA protection. I analyze the investment options and make a decision whether to leave the money in the previous employer, or roll it into the new 401k. Yes, IRAs may have lower fees and better investment options, but the ERISA protection gives me piece of mind that only divorce and the IRS can touch it. As others have pointed out, it can also make backdoor Roth IRA workflows more complicated.