[isaacdl]

I almost posted something this morning about this, because I received an email that really frustrated me. I have a 401k with Guideline from an old employer. The email was from Accrue <[e-mail]>, and said, in part:

> Login: Please visit my.accrue401k.com to log in. You’ll find that the 401(k) dashboard and user experience remain familiar. If you’ve set up your account, your same login credentials will provide you access into the dashboard. (Please note, Accrue does not currently offer a mobile app).

The my.accrue401k.com part was a hyperlink to that site. I've independently done some digging (and contacted my old employer to verify!) but this is precisely how a targeted phishing attack would work. Asking someone to enter their financial account credentials into a site they've never used or heard of, based entirely on an unsolicited email, is INSANE.

This email was the first time I've heard of Gusto, of Guideline being acquired, or of Accrue 401k (which apparently is the company created to hold Guideline's 401k accounts that are NOT affiliated with Gusto). Nice.

[raw_anon_1111]

On a completely unrelated note: I don’t understand why people keep money in prior companies’ 401K plans. I always role mine over to my Vanguard account.

[isaacdl]

I'd love to move the account (especially after this!), but unfortunately I can't because of what is basically an annoying side-effect. My current employer doesn't offer a 401k plan, and the only option I have for contributing to a Roth IRA is via backdoor contributions. Such backdoor contributions (which are basically an IRS-sanctioned loophole) have to start in a Traditional IRA account, and you cannot have any other/pre-existing Traditional IRA funds at the time of the contribution. So, I have nowhere to move the 401k funds besides an IRA account, but I have to leave my traditional IRA accounts empty so that I can do a backdoor contribution.

I wish the federal government would just get rid of the salary cap for direct contributions to a Roth IRA, since they basically already allow it via the obnoxious and convoluted path.

[raw_anon_1111]

What the actual f%%%! I just looked it up. Not that I didn’t believe you. I just never looked into it.

For reference for others…

https://investor.vanguard.com/investor-resources-education/a...

I’m both under the limit to contribute to a Roth since I am married and my company offers an “after tax 401K” (different than a Roth 401k) and I’m over 50 so I can do catch up contributions.

I’m a long way before I need to worry about backdoor contributions.

[paxys]

FYI you can do backdoor Roth contributions even if you already have an IRA with funds in it. It's just more complicated because you have to follow the pro rata rule.

[zackify]

And if you have hundreds of thousands or millions in the traditional. The pro rata rule would make your backdoor contribution 90+% taxed so it would be pointless

[silisili]

The confusion here is that trad IRAs can be pretax or posttax dollars.

This rule only matters if you have pretax dollars in an IRA that you want to also use posttax dollars to backdoor.

To be clear, it wouldn't be taxed at 90% in this example. It's that 90% of the conversion amount would be taxed as ordinary income.

AFAICT there's no extra paying taxes here or anything. Your pretaxed dollars are being taxed, instead of posttax dollars not being taxed.

[timr]

If you roll a 401k into an IRA, those will be pretax dollars in the IRA. It doesn't take a very big rollover to completely swamp the tax benefits of a 7k annual Roth contribution limit.

[floundy]

No. Pro rata is Latin for “in proportion.” It’s one dollar for one dollar. If you add $7k to your tIRA to do the backdoor Roth, you also must convert $7k of existing funds which becomes taxable income. So you pay your marginal tax rate, on half the amount.

IMO not that big of a deal to contribute $7k, convert $7k, and pay $2-3k in taxes to get $14k in the Roth space that will grow tax free forever. Most people are too pre-tax heavy in their retirement strategies anyway.

[aobdev]

I'm not familiar with the strategy you're describing, but this is not how it works for the majority of backdoor Roth contributors.

If you have $100k pre-tax in a trad IRA, contribute 7k after tax for the purpose of rolling into a Roth, then you will owe income tax on the proportion of 100/107*7k, or $6,542.

You're still limited to 7k annual (for 2025) so the 14k you describe must be something else.

[PopAlongKid]

>The pro rata rule would make your backdoor contribution 90+% taxed so it would be pointless

All contributions or conversions to Roth IRAs are after-tax dollars.

[koolba]

The PITA of that is that you have to keep track of the post tax additions pretty much for ever afterward or you’ll end up paying double tax on them.

[yieldcrv]

you can create a solo 401k that contains both a traditional and roth account, and roll over from your old employer's 401k to the traditional solo 401k, and do a conversion to the roth account

there are caveats to this, like always being attached to your solo 401k plan makes you ineligible for contributions to an IRA all the time, but you will be able to have rollovers into the IRAs, you also might decide that the solo 401k is a superior product to IRAs in every way

if you are not currently eligible to create a solo 401k, it is very easy to become eligible with a single dollar of 1099 or schedule C income the year you make it, and then it can exist in perpetuity

corroborate that with your licensed professionals. many gurus overlook the solo roth 401k mostly due to SEO and their audience of professionals that associate "401k" with "corporate employer thing", as opposed to something at parity with a traditional and roth IRA and expanded in capability

[PopAlongKid]

>if you are not currently eligible to create a solo 401k, it is very easy to become eligible with a single dollar of 1099 or schedule C income the year you make it, and then it can exist in perpetuity

No, your scenario is not "very easy". No custodian is going to handle a solo 401k based on one dollar of self employed income (and 1099-NECs aren't issued for such tiny amounts anyway). You are also overlooking the overhead of maintaining a 401k, such as plan updates every time related federal tax law changes, or the potential IRS reporting requirements, which can generate significant penalties if overlooked.

[hansvm]

Merrill Lynch is usually good about that sort of thing. You're right that you wouldn't _only_ have the $1 401k, but they're fine having a few phantom accounts here and there to execute your financial strategies, and they'll stay on top of inconvenient legal changes for accounts they know about.

[yieldcrv]

yeah, in the 10 years I've had one, the compliance is just a notice from the "document provider", and a 5500-EZ document annually. the bank, brokerage and crypto exchange accounts have no monthly/annual fees.

OP can also just use the solo 401k's roth balances as a temporary holding place to then pass through directly to the roth ira

The expanded investment options are worth it alone. And the years where there is self employment income, the expanded contribution limit up to doing my own $70,000 employer match saves literal years of contributions off my life.

It's literally 10x what the IRA contribution guys get, and most of them are barely able to even reach the IRA contribution max.

There are more tax deferral plans out there too, I'm willing to do that compliance.

[isaacdl]

This is really interesting. I'd considered a solo 401k at one point because a made a small amount of self-employment income in one year, but decided against it because it wasn't enough to be worth the hassle, and I didn't expect to keep having self-employment income. Now I wish I had gone through it, just so I'd have a place to roll over this old 401k. (Of course, now that I look, Vanguard doesn't do solo 401ks anymore and redirects to Ascensus, so might just be frying pan to fire anyway.)

[yieldcrv]

> now that I look, Vanguard doesn't do solo 401ks anymore

Vanguard wouldn't need to know it was a solo 401k, they would just see a trust being signed up. There are other institutions that you can go into mutual funds or get similar exposure from who are more acclimated to solo 401k entities though.

[PopAlongKid]

>the only option I have for contributing to a Roth IRA is via backdoor contributions

Here's a simple idea: roll over your 401k, and then take the $7K (or whatever) you were going to put into the Roth and instead use it to pay the tax on a conversion of $20K. Much bigger bang for the buck.

[paxys]

If you work for a large company it is possible that they have negotiated better pricing for their 401k plan than what Vanguard or some other brokerage offers off the shelf. For example Vanguard charges 0.08% for its target date retirement funds, but the one I get on my old employer's plan (BlackRock LifePath) is just 0.037%. And the retail price for that LifePath fund is a whopping 0.17%.

[alright2565]

With how low fees have gotten, I think the more likely and more damaging situation is that where people's employers have negotiated much worse pricing for their captive audience. I wouldn't give 0.08% vs 0.037% a second thought any day. That's only difference of $400/yr on $1M!

[specialp]

The real mover for lower retirement plan fees was lawsuits. There have been loads of 401k excessive fee class action lawsuits and this got almost every employer negotiating to avoid this. Of course there's some plausible deniability in some cases but there is something on the other side against that https://hallbenefitslaw.com/401k-excessive-fee-class-action-...

[paxys]

Compound it over 30+ years and even those few bps add up to a significant amount.

[dangus]

Not really. If you start with a million dollars it’s adding $400 a year and compounding beyond that. But the median person doesn’t have that much in their portfolio…well, ever.

For most people micromanaging below 0.01% is like gaining a cup of coffee every year.

[paxys]

The question was - I don't understand why people keep money in their old 401k accounts.

The answer is - there are situations where it is favorable to do so. It may or may not be favorable for you, and it may or may not be favorable for the median person. But these situations exist. And everyone can check for themselves and make the best decision insted of arguing over a blanket "X is better" or "Y doesn't make sense".

[dangus]

Usually when you leave the company they start charging a quarterly service fee. Be careful out there.

[datadrivenangel]

Not all of them due, which is why I was so surprised to get dinged by this!

[mtillman]

I tend to agree. However, Guideline (an excellent service imo) has admiral class vanguard funds which aren't always available in rollover IRA accounts. I hope Guideline doesn't go away or become exclusively Gusto (irrespective of what they said in the announcement).

[itake]

I’ve always followed this advice as well, but rolling a 401(k) to an IRA limits your ability to do a backdoor Roth.

Unless your Vanguard has a 401(k) account and it already then your golden, I’d advise rolling your previous balance into your current employers account first

[raw_anon_1111]

A backdoor Roth isn’t the be all end all people think it is. It only matters if you think your tax rates will be higher in retirement than they are now for most people that won’t be the case.

The other case is when you are trying to manage IRMAA in retirement and it helps that you can withdraw from Roth accounts. But you can also just contribute to a Roth 401K or a Roth. Yes I know Roth limits for married and single.

[xp84]

But wait. If I take pretax $1000 this year and put it in a Trad IRA and buy some stock, and in 20 years I retire and it’s worth $3000, then I should owe income tax on the $1000 and 15% capital gains on the $2000 gain. If I did the same to a Roth though, I’d pay tax on the $1000 now, so, it’s now $600, but in 20 years it’s $1800, and all of it tax free. (Forgive me if I’ve screwed that up) if I’m right then it kinda seems to depend not only on future tax rates (def a huge question mark) but also on how much the stock may appreciate, as if the stock has more than that modest appreciation the capital gains tax avoided could be huge.

I’m not claiming expert status so I’m happy to be set straight.

[aobdev]

Sorry but you don't get to claim capital gains on retirement distributions, they are entirely taxed as ordinary income. If your tax rate later will be 40%, you get the exact same result: 3000-1200=1800.

If your tax rate will be lower in retirement, favor pre-tax contributions. If higher, favor after-tax. The trick is knowing what tax rates will be years (decades?) from now.

[raw_anon_1111]

You wouldn’t pay tax on the $1000 you put in a traditional IRA. It would be pretax.

[groundzeros2015]

Traditional IRA pretax deduction phases out with higher incomes. Backdoor roth does not

[itake]

> for most people that won’t be the case.

I've had the same belief, but I've started questioning it. In retirement, your income (mostly) matches what you spend. Someone in their 20s or 30s may have both lower income and lifestyle costs (roommates, cheaper cars, no kids, etc) than they will at age 65.

At age 65, you're probably maintaining 1 or more homes, supporting a partner (and kids), maybe drive a more expensive car and have much higher healthcare costs.

If your lifestyle costs are more comfortable than your ramen noodle 20s and higher lifestyle costs put you in higher tax brackets, wouldn't most people actually have higher taxes in retirement?

[raw_anon_1111]

How many people retire with minor kids or even kids in college?

And if you are retiring with high fixed expenses and worrying about buying new expensive cars - you’re doing it wrong.

Anecdotally, at even 51, we (wife 49) have been focusing on reducing our expenses since 2022. Our youngest son (my stepson) graduated in 2020. I slightly pivoted to a career that is mostly remote first (strategy cloud consulting + app dev). We sold our house in the burbs in 2024 that we had built in 2016 for twice the price we paid for it, downsized to one car that is below the median price of a new car in the US, downsized to a condo 1/3 the size of our old house (and less maintenance), moved to state tax free Florida, paid off some lingering debt.

I “retired my wife” in 2020 because of a combination of not wanting her to be in the school system at the height of Covid, so she could explore her passion projects, so we could travel after Covid lifted and I started making significantly more working at BigTech remotely (no longer there).

Our fixed expenses - money we have to spend to live - is around $8K a month all in and that’s going to go down some in 2028.

We don’t live “miserly” at all. Our flexible expenses include lots of travel between short getaways and longer month long stays away from home, concerts etc.

My entire idea is to do most of our expensive traveling while I’m working and healthy instead of waiting until I retire. I see retirement as us staying in another country for extended periods of time - we are starting that next year while I’m working.

It’s also the last thing we want to do is have more than one home. Why would we do that and give up the optionality of just renting an AirBnb for long stays in different places both domestically and internationally?

[itake]

> How many people retire with minor kids or even kids in college?

I think a lot:

avg age of first pregnancy (29.6) + marital age-gap (2.2 years) + 4 years (last kid) + 18 years + 5 years college (gap / delayed graduation) = 58.8 years old when the last kid finishes college. And then parents (probably) will need to help their kid's with their first home purchase.

> Our fixed expenses - money we have to spend to live - is around $8K a month all in and that’s going to go down some in 2028.

My fixed expenses when I was 25 was $2k/mo (living in ATL in 2012), I spend about $6k/mo (ignoring tax payments).

You obviously don't have to continue growing your expenses, but for many people they want the option to stay in their child-raising home (especially if there is rising interest rates and housing prices).

[sgarman]

Well they sold some retirement accounts to Ascensus which you have to have your own account and login for so maybe they will move your 401k too some day and you will be in the same boat as these guys.

[jvolkman]

The process is somewhat archaic (often involving mailing around paper checks) and I imagine many people just don't want to deal. Rolling over pulls your money out of the market which means you could miss a good day (or a bad day).

I left a trail of 3-4 accounts until just recently, when I rolled them all over to my current Vanguard 401k. They were all invested in the same Vanguard fund so there's not much change other than simplicity.

[raw_anon_1111]

With Vanguard at least, while you still have to get a paper check from your employer. But you can electronically deposit it into your IRA account by taking a picture of your check.

[refurb]

If you put it in a rollover 401k you can’t do a backdoor Roth IRA contribution without exposing it being taxed.

[analyte123]

Something no one else mentioned so far is that, depending on your state, some IRA funds can be subject to judgments or non-exempt from bankruptcy, whereas 401k accounts are untouchable for anything except federal tax liens and divorce.

[raw_anon_1111]

I forgot to mention that, when my wife started teaching fitness classes as a “working hobby”, I made sure she had an umbrella policy.

[rsanheim]

because its a huge hassle that many financial services companies have no incentive to facilitate or make easy or discoverable. And for many folks a job change is a stressful event even in the _best_ of circumstances.

I know when I was laid off a week after covid lockdowns, the last thing I was thinking about was how to roll over my 401k as the market collapsed and I began interviewing and trying not to freak out.

having retirement and health benefits coupled to employment is antiquated and stupid, but changing tax code and finance system around 401ks is probably the least of our problems in the US.

[raw_anon_1111]

I have had 10 jobs now and had to rollover my 401K 6 times. I call the financial institution, they send me a check made out to “Vanguard FBO (for the benefit of) $MyName” and mail it to Vanguard with a form.

Now you can do it electronically by taking a picture of the check. When I’m done with the company I’m done. I sold all of my RSUs when I worked for BigTech as soon as they vested and diversified too.

[rcleveng]

I think if your old company plan is with Vanguard and your new company plan is not as good as Vanguard, you leave it in the old company plan as a 401k.

[georgeburdell]

My old company’s 401k has a (now closed to new investors) fund that has returned 3-4% above the index average for over a decade.

[ryukoposting]

In some cases it's a goddamn nightmare to get the money out. I've been trying for a year to get my money out of a Capital Group Roth. Every single support agent is utterly powerless, they're effectively holding my money hostage.

[Schiendelman]

Generally, you want to ask your new financial institution to initiate the transfer for you. Fidelity especially is good about this. They figure out how to get it transferred to them, generally by sending an actual letter if all else fails.

[ryukoposting]

Yeah, when I say "I," I actually mean me, my CFP, and his office assistant. Capital Group might be the United Healthcare of retirement funds.

[Schiendelman]

Yep, ask your brokerage company to do this, not those individuals. Fidelity and Vanguard are very good at solving this for you.

[IncreasePosts]

This whole space is littered with bizarre security practices that make my hacker senses tingle.

I know my 401k is provided by company ABC, but then they host all of their web content and ask you to log in to myretirementplan.com. and then they do a redesign and then ask you to log into yourretirementplan.com. and there's basically no communication from company ABC directly if these sites are legitimate or illegitimate

[cosmic_cheese]

This is common for mortages, too. Mine has been sold a handful of times (as are most peoples') and more than once I've had to triple-verify that the dashboard website the new servicer is telling me to go to is legit. They often have extremely dodgy URLs like "mymortgagedash.com" that have no obvious association with the loan servicer whatsoever.

[xp84]

Yes! It’s like half the companies we interact with are actively working to teach people to do all the no-nos that some of us are trying to educate against.

[SilverElfin]

I wonder if this acquisition update today is caused by the recent lawsuit alleging Guideline was performing corporate espionage. Seems like weirdly coincidental timing?

https://techcrunch.com/2025/10/27/new-corporate-espionage-cl...

[corbet]

Something broke down somewhere ... I got emails a while back about the acquisition and giving options about whether to go along with the move or not.

Since Gusto is our payroll provider, I didn't see a reason not to do that... hopefully there will be less finger pointing the next time something goes screwy with the 401k transfers.

[isaacdl]

My guess is your different experience is precisely because you use Gusto as your payroll provider. My previous employer does not, or at least they did not when I was working there. This was truly the first and only email I've gotten about it, but I have always gotten regular transactional and notification emails from Guideline just fine, including yesterday with a confirmation that I'd changed my asset allocation!

[pants2]

I got an unsolicited call from Fidelity once and they asked for a bunch of financial info. I told them I'd call back on their official number and they said that's not possible, I had to answer right away. So I told them to pound sand. Afterward found out it was legit when they sent the same form by mail.