What are the advantages/disadvantages of rolling over your 401k to an IRA vs keeping it as a 401k (in either your new employer or leaving it as is with your old employer)?

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Advantage: more diverse investment options, potentially less in fees.


Disadvantage: if you need to do Backdoor Roth IRA contributions and you have any Traditional 401k funds being rolled over, it makes your taxes a bigger headache.

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It’s more than a headache it’s really not economic if the person has more than a nominal amount.

For example $100k in a 401k rolled over would make a backdoor 94.5% taxable… not worth it.

If it Roth, an IRA will give you more options and flexibility to withdraw. If traditional, keeping it in a 401k may be better if you contribute to a Roth IRA and may need to do backdoor Roth IRA in the future

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