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Posted by kramer31 on October 19, 2007, 1:36 pm
Hi. It seems that my company's 401K investment options are quite
limited, so can open an IRA with a company with better options while
still keeping my 401K (as I need it for matching, etc.)?
If not, then when I change jobs can I roll my investments over and
then start a new 401K with my new company?
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Posted by on October 19, 2007, 2:04 pm
> Hi. It seems that my company's 401K investment options are quite
> limited, so can open an IRA with a company with better options while
> still keeping my 401K (as I need it for matching, etc.)?
Anyone with earned income can open an IRA. If your income
is above a certain level *and* you have a 401k, you won't
be able to deduct IRA contributions from your income for
tax purposes (and you track the IRA's cost basis annually
via an IRA form - the quite trivial Form 8606).
If your income is below a different (larger) threshold,
you may contribute after-tax dollars to a Roth IRA instead
of a traditional one.
> If not, then when I change jobs can I roll my investments over and
> then start a new 401K with my new company?
When you leave your job, you can roll your 401k into a
regular traditional IRA. And in most cases, that's what
I'd recommend doing. Not all, but most.
--
Plain Bread alone for e-mail, thanks. The rest gets trashed.
No HTML in E-Mail! -- http://www.expita.com/nomime.html
Are you posting responses that are easy for others to follow?
http://www.greenend.org.uk/rjk/2000/06/14/quoting
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Posted by Mark Freeland on October 19, 2007, 3:05 pm
>
> Anyone with earned income can open an IRA. If your income
> is above a certain level *and* you have a 401k, you won't
> be able to deduct IRA contributions from your income for
> tax purposes (and you track the IRA's cost basis annually
> via an IRA form - the quite trivial Form 8606).
It may not be relevant to the OP, but "[c]ontributions cannot be made to
your traditional IRA for the year in which you reach 70 1/2 or for any later
year." http://www.irs.gov/publications/p590/ch01.html#d0e1780
So some wage earners may not be able to contribute to any IRA.
Mark Freeland
BnetOnewsX@sbcglobal.net
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Posted by on October 19, 2007, 3:31 pm
> > Anyone with earned income can open an IRA. If your income
[but not necessarily deduct it]
> It may not be relevant to the OP, but "[c]ontributions cannot be made to
> your traditional IRA for the year in which you reach 70 1/2 or for any later
> year." http://www.irs.gov/publications/p590/ch01.html#d0e1780
Quite right, thanks. And, in fact, the >70-1/2 age
group is increasingly still working, too. The following
breaks it down into 65-74 and 75+, but between those
two groups, the numbers are rising quite a bit:
http://www.bls.gov/emp/emplab06.htm
But, yeah, it very likely doesn't apply to the OP...
--
Plain Bread alone for e-mail, thanks. The rest gets trashed.
No HTML in E-Mail! -- http://www.expita.com/nomime.html
Are you posting responses that are easy for others to follow?
http://www.greenend.org.uk/rjk/2000/06/14/quoting
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Posted by kramer31 on October 20, 2007, 3:39 pm
Thanks for the info guys. I'm only 28 right now so I'm not worried
about the 70.5 limit. I also do not want to contribute to an IRA in
ADDITION to a 401K. Rather, I'm wondering about transferring existing
funds from my 401K into an IRA. I need to keep contributing through
my 401K right now because my employer is matching a certain level of
contribution (also, the limit is higher), but I am not at all happy
with the options for my 401K, so I was wondering if it was possible to
make the contributions through the 401K but then rolling/transferring
those contributions to the IRA which has more options. Can I still do
this while I am employed and the 401K is still active or do I have to
wait until I leave the company?
Also, what happens when I start a new job which has a 401K. Will I
have to transfer all of the funds from my IRA back into whatever 401K
plan my employer has? I was actually planning to take a few years off
and go back to school, so I was planning to roll into an IRA and then
into a ROTH IRA, pay the taxes while I was unemployed and in a very
low bracket, so what would happen then will I have to transfer the
Roth IRA into a 401K and lose the post-tax nature of the Roth funds?
Incidentally, this is the first 401K plan that I've had and there are
about 6 or 8 mutual fund options and one S&P 500 index fund to choose
from--no international funds, bond funds, precious metal commodities,
or REITs. I was damned disappointed in the selection. How am I
supposed to hedge properly if I can only invest in the US stock
market? Do 401Ks tend have so few options or did my employer just
pick a bad one?
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