White Coat Investor Podcast WCI #255: Answering Your Questions About 401(k)s And How To Manage Them
Mar 24, 2022
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Don't Roll Into An IRA If You Want Backdoor Roths
- Avoid rolling a 401(k) into a Traditional IRA when leaving an employer if you plan to use the backdoor Roth strategy.
- Keep funds in a 401(k) or roll into another employer/solo 401(k) to preserve backdoor Roth flexibility.
IRA Asset Protection Varies By State
- In Pennsylvania, IRAs have strong state-level asset protection similar to 401(k)s, so moving to a solo 401(k) for protection is often unnecessary.
- Solo 401(k)s may not get the same federal protection as employer 401(k)s, so check specifics before relying on that.
Hold Leveraged Real Estate In A 401(k) To Avoid UBIT
- Use a 401(k) instead of an IRA to hold leveraged real estate to avoid Unrelated Business Income Tax (UBIT).
- If you can place leveraged real estate into a 401(k), you may sidestep UBIT that applies inside IRAs.