Planning Ahead: Rollover Strategies [401(k)]
My mixed 401(k) at Fidelity contains both Roth (not-taxable) and
non-Roth (tax-deferred) contributions. A few years ago a Fidelity rep
told me that throughout retirement I would not be able to make
separate withdrawals from one of these account types, or the
other; that my withdrawals would be mixed with a ratio proportionate
to my holdings among these two distinct tax categories.
[True?]
To override this situation, and give me more choice, might I simply
roll over my 401(k) into two separate IRA accounts at Fidelity — Roth
and non-Roth — containing equivalent holdings? [I’m aware that I
might have to convert some “advisor” class funds that are only
available within the 401(k) plan].
The advantage (and purpose) of this split would be to allow
independent withdrawals among these two categories, giving me precise
control over my tax situation, e.g.,allowing tax-free Roth
contributions to grow . . . or, conversely — and perhaps preferably
— making tax-free withdrawals from the Roth IRA [formerly Roth
401(k)] while letting the taxable non-Roth funds accrue gains whose
tax — for my beneficiaries — would be erased by the step up in cost
basis at my death.
Is this a viable plan? Any foreseeable red flags, or snafus?
PS I’m new here [and 57, still pre-retirement]; just trying to plan ahead 😉
If this has been asked/answered before, then please simply send me a referral/link.
Thank you!
Permalink Submitted by Alan - IRA critic on Tue, 2015-09-08 18:25