Hi All,
I'll be starting a new job tomorrow that offers a 401k (through fidelity) with many additional options as compared to my previous 401k (which was just a standard 401k plan). I'll have the option to do a normal / roth / after-tax 401k, and will have the option to do in-service rollovers. I have previously always maxed out my pre-tax 401k, and will continue to do so. I have also previously maxed out a Roth every year. At my pay rate with the new company, I do not expect to be able to qualify for a Roth at all (I could still do a backdoor obviously). I currently have both a 401k, and a rollover 401k in an IRA that I will be rolling into the new company's plan (leaving me with no IRA except for my Roth, and making a backdoor a viable strategy without having to pay additional taxes... i.e. I will no longer have both a pre and post tax IRA).
Anyway, my main concern is how to handle additional money that I want to contribute to retirement beyond my normal pre-tax 401k. Specifically, I'm wondering how doing a mega backdoor via post-tax 401k would impact my ability to withdrawal principle without penalty from my Roth IRA should I need to do that (it's unlikely). My current Roth IRA account is well beyond the 5 year requirement.
If I allocate say, 20k into post-tax 401k and roll that into a Roth, does the 5 year clock start ticking again? Does it matter if I roll it into my existing roth account, OR into a new Roth account? Note that I'm only talking about the principle here, not the earnings.
I'll also say, because I know I will get this question, that I don't intend to NEED to pull out this money, but I want to know the rules if I should be put in a position where it's advantageous. I'm not using this is an emergency fund or anything like that. I also have a normal brokerage account with about as much money in it as currently is in my 401k + rollover IRA + Roth combined, mostly because I needed a place to invest outside of what was previously available to me.
Submitted October 20, 2019 at 09:32PM by wuzup101 https://ift.tt/2J7x06G
