{ "media_type": "text", "post_content": "When leaving a company, what do you do with your 401k and ESPP accounts?", "post_id": "609ec3b981dc830021ee305c", "reply_count": 11, "vote_count": 2, "bowl_id": "5b3f7377ab53db00136f7b4c", "bowl_name": "FIRE Financial Independence Retire Early" }

When leaving a company, what do you do with your 401k and ESPP accounts?

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401k I would rollover to your new company’s 401k (instead of an Ira) so that you can do backdoor Roth without paying tax on any of the conversion.

What VP1 is saying makes sense. You can roll old 401 into new 401... Not taxable event. If you put in rollover IRA, you will get snagged by pro rata rule on backdoor attempt. Or, before you do backdoor, convert any non-Roth accounts and pay the piper first to clear the space. Not terribly difficult, but read up so you don't get nailed.

Why would you back door while working? Just push to a higher tax bracket. I thought you want to convert once you stop working so you optimize tax brackets. Is there another benefit to converting now?

Yes thank you!

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I would roll it into your new plan or a corresponding ira account. I think it’s easier to just keep it in one place haha

Rollover. You can leave it there but after a few jobs this gets unwieldy. Plus you may get charged higher fees if you’re no longer an employee but using their service.

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