401K to Roth IRA - yes or no?

[Calm Man]

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?

[peppers]

What does your SPD Summary Plan Description say? Are you retiring, over 59.5? etc.

[retiredjg]

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.

[retiredjg]

http://www.irs.gov/pub/irs-tege/rollover_chart.pdf

[Default User BR]

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


Brian

[Calm Man]

It is the Vanguard self-employed 401K that I am specifically considering in this situation.

[DSInvestor]

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.