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I missed the open enrollment date for this year to enroll in to 401k, I do not want to wait until next year. What are my options at this point?

  • Should I open an IRA account?
  • If yes, Which one Traditional or Roth?
  • Would I be able to move it to my employers 401k account next year.

Let me know if I can add more info?

Update: Edited the question to clarify between traditional or Roth IRA account

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Should I open an traditional Roth IRA account?

Traditional IRA and Roth IRA are two different things. You should decide whether Traditional or Roth is for your advantage at this time, but you should probably open one.

Keep in mind the income limitations.

If yes, would I be able to move it to my employers 401k account next year.

To the best of my knowledge - no. You can only roll into a 401k funds that are sourced from a previous 401k. But things have changed during the last several years, and may be this limitation is no longer valid as well. However, not any 401k plan accepts incoming roll overs at all, and for starters you should check if your employer's does.

That said - there are many reasons not to roll over your IRA to 401k. You can search this site, this has been discussed extensively. You can contribute to IRA and 401k at the same time, and keep both the vehicles at your disposal. They have different characteristics and IRAs may be more beneficial than 401ks in some, and 401ks more beneficial in other areas. Why not have both?

  • "You can only roll into a 401k funds that are sourced from a previous 401k." No, the funds do not have to be from a 401k in general. But some 401ks may choose to have such a requirement. – user102008 Jul 1 '14 at 9:19
  • Agree with @user102008, in most cases you should be able to roll-in a Traditional IRA to your current employer's 401(k). This is the workaround to avoid pro rata taxes with the backdoor Roth IRA contribution. – Craig W Jul 1 '14 at 16:55
  • Some time ago there was a requirement to segregate original 401(k) money into a 'rollover' IRA, and only that money could be moved into a newer 401(k). That requirement went away some years ago. – JoeTaxpayer Jul 1 '14 at 19:51
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Should I open an traditional Roth IRA account?

Besides the income limit you also have to keep in mind that the IRS doesn't care that you decided not to participate in the 410K, it was offered therefore they consider that yo are covered by a retirement plan at work.

Regarding a Traditional IRA:

  • Assuming you are single a traditional IRA is fully deductible if your Modified AGI is $60K or less.
  • more than $60,000 but less than $70,000 a partial deduction.
  • $70,000 or more no deduction.

There are limits for the Roth IRA but they are not based on if you have a 401K at work.

By missing the open season you are also missing out on any company match. I have only heard of 401K open seasons for very small companies. Verify that there is no other possibility.

Also ask if having a life event (baby, marriage, change in employment by spouse) will allow you to join in the middle of the plan year. Joining a 401K isn't a good reason to trigger one of the event, but if it does apply you wouldn't want to miss another chance.

would I be able to move it to my employers 401k account next year?

The plan decides what type of rollovers they allow into the plan. You have to see what they allow. Most people aren't interested in rolling IRA money into a 401K, because you generally have at most a dozen investment choices in the 401K, but have thousands of choices in the IRA. Also the matching is gone, so you don't get it back by rolling money into the 401K.

  • 401k "open seasons" are IRS requirement. I've never heard of a 401k plan without them. – littleadv Jul 1 '14 at 15:57
  • "but they are based on if you have a 401K at work." You mean "they are not based on ..." – user102008 Jul 1 '14 at 18:47
  • Yes I dropped a not – mhoran_psprep Jul 1 '14 at 23:10
  • "that the IRS doesn't care that you decided not to participate in the 410K, it was offered therefore they consider that yo are covered by a retirement plan at work." Not true. irs.gov/Retirement-Plans/… says that for a 401k, you are considered "covered" only if contributions or forfeitures were allocated to it. – user102008 Mar 3 '15 at 1:25

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