401K to Roth IRA - yes or no?

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401K to Roth IRA - yes or no?

Postby Calm Man » Sun Dec 30, 2012 10:56 am

I hope this is a simple yes or no question. I have searched the threads and done a web search and seem to get conflicting answers. It is clear that a ROTH 401K (which I don't have) can be rolled directly to a ROTH IRA. But, can a traditional 401K (pretax) be rolled directly to a ROTH IRA?
Last edited by Calm Man on Sun Dec 30, 2012 12:59 pm, edited 1 time in total.
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Re: 401K ro Roth IRA - yes or no?

Postby peppers » Sun Dec 30, 2012 11:17 am

What does your SPD Summary Plan Description say? Are you retiring, over 59.5? etc.
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Re: 401K ro Roth IRA - yes or no?

Postby retiredjg » Sun Dec 30, 2012 11:28 am

The law allows it. I think this is somewhat recent (last several years) which might account for contradictory info on the internet. I would think your plan allows it, but you'd have to check. However, I'm not sure that your plan actually has control over whether you send it to traditional or Roth IRA.

Unless your 401k is pretty small and your tax bracket pretty low, it's probably not a great idea though.
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Re: 401K ro Roth IRA - yes or no?

Postby retiredjg » Sun Dec 30, 2012 11:33 am

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Re: 401K ro Roth IRA - yes or no?

Postby Default User BR » Sun Dec 30, 2012 12:56 pm

Naturally, ordinary income tax would be due on the entire amount.


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Re: 401K to Roth IRA - yes or no?

Postby Calm Man » Sun Dec 30, 2012 1:00 pm

It is the Vanguard self-employed 401K that I am specifically considering in this situation.
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Re: 401K to Roth IRA - yes or no?

Postby DSInvestor » Sun Dec 30, 2012 1:05 pm

As Brian indicated, rollover of pre-tax assets from 401k to Roth IRA would be taxable. Rollover pre-tax from 401k to Traditional IRA would not be taxable. Once the money is in traditional IRA, you can convert to any amount to Roth IRA. This gives you some control of the amount of conversion income you add. Maybe you'd like to do a series of smaller conversions over several years rather than one big conversion at the time of the rollover.
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