Rollover IRA Question (x-post)

[otnemem]

I posted this in BF+I but nobody even responded. I figure more people read OOT, and so I was hoping someone could help me out. THIS IS NOT A GOOGLETARD POST. I've been looking everywhere for this tiny piece of information, and can't find it anywhere...

I just started at a new job, and I can't contribute to my new company's 401k for a year. I'm rolling my previous 401k into a rollover IRA. When I am able to contribute to the 401k, is there any benefit to combining my new rollover IRA with the eventual 401k? Or does it just make sense to leave the money in the rollover IRA and keep two separate accounts (the rollover IRA with money from my old 401k, and then the new 401k through work)?

Thanks.

[CrazyEyez]

You probably have yearly custodian fees on the rollover. These are like <$100. Other than that, I can't think of a benefit of combining them. By keeping it separate, you essentially have unlimited investment options, whereas if you dump it into your new 401k, you have whatever choices your plan offers.

[otnemem]

Thanks. One other question, if you have the time. I meet the criteria to make the maximum contribution to the IRA. Is there any sense in selling $4,000 of stock and putting it in the IRA (since it's tax-deductible)? I know I'll pay taxes on the stock gains after I sell it, but a $1,000 deduction far outweighs the amount of taxes I'd pay on certain gains. Does this make any sense at all?

[punkass]

[ QUOTE ]
Thanks. One other question, if you have the time. I meet the criteria to make the maximum contribution to the IRA. Is there any sense in selling $4,000 of stock and putting it in the IRA (since it's tax-deductible)? I know I'll pay taxes on the stock gains after I sell it, but a $1,000 deduction far outweighs the amount of taxes I'd pay on certain gains. Does this make any sense at all?

[/ QUOTE ]

How long have you owned the stocks? If the sale is taxed at long term 15% rate, then I don't see a problem.

[otnemem]

[ QUOTE ]
[ QUOTE ]
Thanks. One other question, if you have the time. I meet the criteria to make the maximum contribution to the IRA. Is there any sense in selling $4,000 of stock and putting it in the IRA (since it's tax-deductible)? I know I'll pay taxes on the stock gains after I sell it, but a $1,000 deduction far outweighs the amount of taxes I'd pay on certain gains. Does this make any sense at all?

[/ QUOTE ]

How long have you owned the stocks? If the sale is taxed at long term 15% rate, then I don't see a problem.

[/ QUOTE ]
I've owned one for more than three years, the other for over a year...

[punkass]

[ QUOTE ]
I've owned one for more than three years, the other for over a year...

[/ QUOTE ]

You will only pay 15% cap gains tax on the profit, which isn't going to be much on a $4k total stock sale. If $1000 was profit, you'd only pay $150 to free up the $4k to put into the IRA. Looks good.

[punkass]

Generally, IRA's will have more options than a 401k plan. For example, my 401k plan does not have any REITs. Only 2 international funds. Only one Large cap value fund. Etc.

However, if you only have a little to rollover (you said $3k?), then just to eliminate the hassle of having two accounts, you might want to just rollover your old 401k into your new 401k when you're able to and not establish an IRA.

[otnemem]

[ QUOTE ]
Generally, IRA's will have more options than a 401k plan. For example, my 401k plan does not have any REITs. Only 2 international funds. Only one Large cap value fund. Etc.

However, if you only have a little to rollover (you said $3k?), then just to eliminate the hassle of having two accounts, you might want to just rollover your old 401k into your new 401k when you're able to and not establish an IRA.

[/ QUOTE ]
It's kind of complicated. I currently have two 401k balances, because the first one failed to correctly send my balance to the new 401k. Now I left for a third job, so I can no longer combine the two IRAs. So I'm opening the IRA in order to just have everything in one place.

EDIT: Rereading this, it sounds completely nonsensical.

Left one job about a year ago. That job failed to send my 401k balance to the job I started about a year ago. A month ago, I got another new job. Now I have 401k balances at two old jobs...

[punkass]

You can send your 2 old 401k balances and either roll them into one IRA or once you have opened a 401k at your new job, roll both old balances to your new one.