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The move from investing in a Roth IRA to having an employer-provided 401K is the only move that I can find information on. For the past fifteen years or so I've managed a Roth IRA for myself (and for the past five years for my spouse). Recently I finished grad school and in August I start at an employer that offers a 401K with a good match, so I'll use that instead. My spouse will become a freelancer.

Where can I find out more about this transition from Roth IRA to 401K? My fears are the following.

  1. paying a penalty for what we've contributed so far this year (depending on her salary the second half of the year we could be over the Roth IRA limit)
  2. paying a penalty for contributing to both a Roth IRA and 401K in the same year

Is there a good reference about this transition?

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    are you looking to transfer IRA money in the 401K? Or are you asking how to manage 401K and IRA contributions for the rest of the year to not run into problems with limits? – mhoran_psprep Jun 15 '15 at 13:30
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    There is no need to "transition" from a Roth IRA to a 401k in the sense of rolling over funds from a Roth IRA into your 401k plan (a bad choice in my opinion); you can, if you are eligible, contribute to both (if you care to). If you are worried that your (joint) Adjusted Gross Income for 2015 will be high enough that your spouse cannot contribute to her Roth IRA, remember that contributions made during 2015 for 2015 can be removed or recharacterized before April 15, 2016 without penalty. Many people do this if they are on the cusp of the cutoffs; contribute now, fix it later. – Dilip Sarwate Jun 15 '15 at 13:33
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    Why not keep both? There's nothing stopping you keeping both. Contribution limits may stop (or limit) you contributing to the Roth. – Peter K. Jun 15 '15 at 14:04
  • @mhoran_psprep -- I don't want to roll it over, I just don't know what I don't know. :) But I've gotten a lot of good advice here. Thanks! – Richard Herron Jun 15 '15 at 14:16
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    @DilipSarwate -- Thanks! I didn't realize that I can do both. I guess that why I couldn't find information on moving from Roth IRA to 401K... because you shouldn't. – Richard Herron Jun 15 '15 at 14:19
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I am sorry but this does not really answer your question, but people don't typically do this. It is often recommended they do the opposite. They move money from a Tax free plan (like a tradition or roll over IRA) into a ROTH IRA. A Roth IRA is much better for a person that is young. With a ROTH you pay taxes now (you already have), and withdraw tax free on the growth.

You can maintain and continue to contribute to your ROTH while also participating in the 401K. (Income limits the contribution but not the maintenance.)

It is typically recommended that you first contribute to your 401K up to the match. Lets assume that it is 6%, but you want to save 15% of your income for retirement. So 6% would go to your 401K, then the next 9% would go into your ROTH. You may then have to revisit your 401K to put more in to get to the 15% you desire.

To complicate matters many 401K plans offer a ROTH option. The money you put in will go in taxed, but the match will be taxed.

If your 401K plan offers such a ROTH option, you may still want to go up to the match, then into your private ROTH, then round it out with the rest of the money in the 401K. Why? Because your may want different investment option then the 401K offers.

You may not be finding much info on this because it is such a bad plan. I think you believe that you have to do such based on some false assumptions.

Good work on taking care of your future needs.

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    Thanks, @Pete! I think this does answer my question. I just didn't know what I didn't know about maintaining two different style retirement accounts. I never wanted to move the Roth IRA funds and closeout the account, I just didn't know that I could continue contributing to both. Seems like too good of a deal. :) – Richard Herron Jun 15 '15 at 14:25
  • You are welcome. For reference sake, I have a ROTH, a rollover IRA account, a 401K from a former employer, and a 401K from my current employer. While it is often recommended to consolidate these into one account, my situation dictates that this is pretty efficient. – Pete B. Jun 15 '15 at 16:37
  • @PeteBelford: The advantage of rolling the 401k from former employer into an IRA is that you gain a lot more control over the account, and usually also save on fees. – Ben Voigt Jun 15 '15 at 18:25
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An employer plan might permit an inbound transfer. Since you have a Roth IRA, this only makes sense if the 401(k) has a Roth flavor as well. If not, you keep the Roth IRA and have a 401(k) as well. If there's a Roth 401(k) - there are 2 reasons that come to mind to move the money:

  • The plan offers an ultra low cost set of funds. My old company plan's S&P fund has VIIIX as an option, this fund charges .02%/yr expense. I wouldn't pass on that for anything.
  • The 401(k) offers a loan provision. Ignoring all the reasons not to take a 401(k) loan, this at least keeps that option open.

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