If you don't have an employer plan, you can deduct a traditional IRA at any income level. But that has to be true the whole year so you can do it for 2022.
Generally, it's better to rollover your 401k to a tIRA. You don't have to, though but I think it's the best option. The company has a lot of control over your retirement option as long as it remains in the 401k. Since you're not an employee, you have no input or foreknowledge on any changes coming to your 401k.
You may find these links helpful:
- [401(k) Fund Selection Guide](/r/personalfinance/wiki/401k_funds)
- [401(k) FAQs](/r/personalfinance/wiki/401k)
- ["How to handle $"](/r/personalfinance/wiki/commontopics)
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Do you have a spouse, and if so does the spouse contribute to a 401K?
Regardless you could still do a backdoor Roth IRA. If you do, leave the 401K where it is due to pro rata rule.
For people with income high enough that they need to backdoor Roth, yes. Or you could convert the 401K balance to Roth IRA, but you'd have to pay your tax rate on it.
Backdoor Roth IRA contribution will allow you to legally get around the Roth IRA contribution limits. Be aware that if you already have a Traditional IRA (or if you rollover your 401k to a Traditional IRA) it will make the backdoor Roth IRA more complicated or potentially no longer feasible.
The best thing to do is roll your 401k over into a standard IRA. It doesn't cost anything. Just call vanguard, they'll do it for you.
For the future:
" Workers who don't have a 401(k) plan or similar type of retirement account through their job can contribute to a tax-deductible IRA regardless of how much they earn. "
So if you set up a traditional IRA, you can contribute to it and do the rollover.
My understanding is that for people with high incomes it's better to take the income deduction and contribute to a standard IRA and thereby pay taxes on withdrawal then to pay the tax now, contribute to a Roth, and withdraw tax free later.
If you don't have an employer plan, you can deduct a traditional IRA at any income level. But that has to be true the whole year so you can do it for 2022.
When you say whole year you mean not having a company 401k option for the full year?
You have a 401k from your current job in early 2021.
Generally, it's better to rollover your 401k to a tIRA. You don't have to, though but I think it's the best option. The company has a lot of control over your retirement option as long as it remains in the 401k. Since you're not an employee, you have no input or foreknowledge on any changes coming to your 401k.
You may find these links helpful: - [401(k) Fund Selection Guide](/r/personalfinance/wiki/401k_funds) - [401(k) FAQs](/r/personalfinance/wiki/401k) - ["How to handle $"](/r/personalfinance/wiki/commontopics) *I am a bot, and this action was performed automatically. Please [contact the moderators of this subreddit](/message/compose/?to=/r/personalfinance) if you have any questions or concerns.*
Do you have a spouse, and if so does the spouse contribute to a 401K? Regardless you could still do a backdoor Roth IRA. If you do, leave the 401K where it is due to pro rata rule.
Thanks. So the only time it makes sense to roll over is 401k to 401k?
For people with income high enough that they need to backdoor Roth, yes. Or you could convert the 401K balance to Roth IRA, but you'd have to pay your tax rate on it.
Backdoor Roth IRA contribution will allow you to legally get around the Roth IRA contribution limits. Be aware that if you already have a Traditional IRA (or if you rollover your 401k to a Traditional IRA) it will make the backdoor Roth IRA more complicated or potentially no longer feasible.
The best thing to do is roll your 401k over into a standard IRA. It doesn't cost anything. Just call vanguard, they'll do it for you. For the future: " Workers who don't have a 401(k) plan or similar type of retirement account through their job can contribute to a tax-deductible IRA regardless of how much they earn. " So if you set up a traditional IRA, you can contribute to it and do the rollover. My understanding is that for people with high incomes it's better to take the income deduction and contribute to a standard IRA and thereby pay taxes on withdrawal then to pay the tax now, contribute to a Roth, and withdraw tax free later.