I got laid off at the end of August and I have about $58k in a pension with former employer. Since I’m mid 40’s I don’t need the money now and I want to save it for retirement. I just got off the phone and verified that I don’t have to do anything within 60 days since those IRS guidelines are only for pensions you have to pay into (mine is employer paid). I can keep the money there or roll it over to a qualified plan. I’m trying to figure out what the best option but let me give you more details.
I’m keeping my current 401k (~$800k) with the employer plan. The plan is good but not as good as I could do myself at Vanguard but I do backdoor Roth every year so can’t have any money sitting in a regular IRA. For those that don’t know, I put $5500 non-deductible into IRA then the next day convert it to Roth IRA (no taxes since no gain and all after tax dollars) every January. I was also putting 10% of my pay into a post-tax 401k which I would roll over to Roth IRA 3-4 times a year (only pay taxes on gains and I had in cash account so very little gains). If I had a regular IRA with a balance these two things would not be possible as I’d owe taxes so that’s why I’m keeping everything with current 401k and not moving everything to an IRA. I am looking for a new job but doubt I’ll want to move over the 401k unless the new plan is great, which is unlikely.
With this in mind, I have the following options for my pension money:
Leave the money there and do nothing for now. It will grow (at current low crappy rate but interest rates are rising). I can make decision at any time up until age 65 when several options disappear.
Roll the money over to my 401k with old employer.
Roll into IRA an then convert to Roth IRA. Not sure what the tax hit on this would be but wife is high income so we’re in top bracket and high tax state (NJ).
Am I missing any other choices you can think of? Option #1 seems best as I can make other choices (2 or 3) at any time but I’m wondering if #2 is nice just to have one less account to worry about. Thoughts and ideas?