Considering using this mega backdoor roth IRA plan now. In SNAP we can contribute after-tax money to after-tax 401k, and then use roth in-plan conversion to convert to roth 401k. My question is if i want to convert this after-tax money to my personal roth IRA, how can i do that? Do I need to call fidelity to do it? And whats the pros and cons between roth 401k and personal roth IRA in this situation? Which one is preferred? Thanks!#personalfinance #investments
You can move your Roth 401k to Roth IRA easily, by calling Fidelity. But you’ll have to call them every time you want to move any balance because this part is not automated. Fidelity has automatic After-tax 401k to Roth 401k in-plan conversion. And you can move all your Roth 401k monies this way - both your contributions and any gains you might have. Why do you want to do this? For more investment options?
Thanks. One main reason is that I can take the base investment money(not the gain) out of Roth IRA anytime, but if the money is in Roth 401k, I don’t think I can do it.
Check with Fidelity if you can withdraw contributions directly from Roth 401k. I don’t see why you cannot (I might be wrong). One advantage of keeping it in Roth 401k is that you can take a loan against it. But if your non-Roth 401k balance is more than 2x of the maximum loan you can borrow, then it doesn’t matter.
I called Fidelity and asked them to set up in-plan conversion. There is a wiki about this on snappy. Not sure about personal Roth
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It's really simple actually. The Roth parts of your 401k can be rolled into a Roth IRA and the pre-tax part into a traditional IRA ... When you leave snap that is.
Thanks. Yeah that requires leaving the company though. I am thinking if I can convert to Roth IRA when I am still in current company.
What's the advantage of doing that?