jwehrer I would guess the actual vested funds are held at an investment firm (Principal, I assume) and that shouldn’t be affected by his former company.

However, even if that's the case, I'm with jwehrer for this situation. For that amount of funds, I'd consolidate it at Vanguard. If you can afford to pay the taxes, roll it over into your Roth.

Annieland You might look into rolling your husband’s traditional IRA into his 401k. Then he can start a backdoor Roth as well without the pro-rata consideration. He could even fund last year’s and this year’s. That’s what I did a few years ago to great effect. As a result, I’ve also been doing Mega Backdoor Roth contributions from my company 401k with after tax funds.

Superbone I will admit, I am sorely lacking in general 401k knowledge at this point.  Basically, I skip over those sections in everything I read :).  But it's on the list.  It's just in the past year I've finally been able to figure out how to pull this backdoor Roth thing, and only the year before that we could afford to contribute the federal max.  God willing, maybe in the next few years we can try a mega backdoor.  I didn't know (or forgot) that it gets around the pro-rata issue.  Thank you for the heads up!

I always considered 401k's sort of "throwaway" accounts because the options, matches, and our ability to contribute historically sucked.  Things are so weird in a household where one person works and has never logged into a single retirement account, and the other person has zero income or credentials and tracks them daily :).

Budget_NC Feel free to disagree with me. You're wrong. 😉 It only makes sense to convert the funds in a year you will be in a lower tax bracket or to avoid having to withdraw them in a higher tax bracket. Otherwise it's actually a wash, and in the case of a wash there is no point doing it now, because you leave open the possibility of a future year with a lower tax bracket in which you can pull trigger, rather than closing that door permanently at the current rate.

Granted, we are making an assumption here about the marginal tax rate of the money going in that was deferred, but the clues in the OPs post imply it's the same bracket.

nolesrule I agree with you.  Back when I rolled his $9k 401k to open his new Roth, we had a negative effective tax rate.  Know how I made contributions to our Roths for years?  I bought $2k of Apple stock in 2000 and held it.  So, starting in 2011 I sold around $11k+ worth to put into Roths.  Our LT Cap Gains rate was 0%.  I stopped 5 or 6 years later once I was able to cash flow our contributions in YNAB.  Would that money have done better still sitting in AAPL? Probably, but the shares I have left have a $0.001248 cost basis so I just leave it alone now.  

Also, I know it's conventional wisdom that our tax brackets will be lower when we all retire.  But it's still scary to me, because I managed my mom's affairs for 10 years before she passed away in 2019, and even though she and my dad saved religiously in their IRAs, and ended up with a nice nest egg, I had to withdraw enough to buy a house every single year to support her nursing care costs.  Sure, it was deductible (to a cap that caught me off guard one year), but it skyrocketed her into the top tax bracket and the associated extra medicare costs.  

nolesrule I might be wrong.  It has happened.🙂  But there are a couple of assumptions that I question, and the main one is that our marginal tax rate in retirement will definitely be less than the current tax rate.  Given federal spending and deficits, I see future tax rates going nowhere but up, and do not automatically assume that I will have less money in retirement and a lower tax rate.  I also believe that the current rates under the 2017 tax legislation are the lowest that we are ever going to see.  One other factor is the amount of time for earnings to grow tax free.  In the case of the OP, age 44 to retirement is a significant amount of time for investments to grow.  And if by some chance rates do turn out to be lower in 5 years, then the money converted now has still had time to grow tax free for 5 years versus converting a larger balance in 5 years at a lower marginal tax rate.  In my case, our largest pot of retirement money is pre-tax because I didn't take enough advantage of the Roth option when I was younger.  At age 55 I have a harder time justifying conversion.  And I also don't have enough extra cash lying around to pay the taxes.

Budget_NC It's hard to speculate on future tax rates. Yeah, the current rates will revert in a few years, but generally speaking tax rates have come down despite everyone thinking they should go up. The rates could change on the top brackets without need to change the lower ones and that could result in more Federal revenues than raising all rates. Or they governments could look at other ways to raise revenues outside of income taxes. The math is tricky and there's no way to predict which way things will go.