Move Roth Principle To Traditional Solo 401k

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getco
Posts: 25
Joined: Fri Jul 14, 2017 7:10 am

Move Roth Principle To Traditional Solo 401k

Post by getco »

Bogleheads,

I have ~$30,000 in principle that I could withdraw from a Roth IRA.

We're currently in a HCOL area, with State+City income taxes around 8%, but are moving to a lower cost of living area (with no state income tax) at the beginning of the year.

I would be able to contribute all of the Roth principle to a Solo 401k. Would it be smart to move those Roth funds, into a Traditional 401k account?

My rationalization is that I will save tax $$$s while in a high cost state, and I could do backdoor Roths in the future to move these funds when I have less income and lower income taxes. Anything I'm missing?

Thanks,
-g
Lou354
Posts: 787
Joined: Sun Apr 03, 2016 10:51 pm

Re: Move Roth Principle To Traditional Solo 401k

Post by Lou354 »

As far as I know you can't convert Roth IRA contributions to a traditional 401k. What you can do is withdraw the Roth contributions and make new pre-tax contributions to your individual 401k, subject to an annual contribution limit of $54k ($60k if age 50+). You'd get a tax break now but you'd be missing out on the tax-free growth between now and when you do the backdoor Roth conversions in your low income years, and that's assuming backdoor Roth conversions are even permitted at that future date.
Tanelorn
Posts: 2366
Joined: Thu May 01, 2014 9:35 pm

Re: Move Roth Principle To Traditional Solo 401k

Post by Tanelorn »

Obviously you can't do a direct transfer from Roth to Traditional (only sometimes recharacterize one you later regret).

If you were closing in on retirement and still working at a higher-than-future-expected tax rate, it could make sense to "live off" your Roth principle capital while contributing more of your salary pretax to a traditional IRA / 401k than you could otherwise afford. You do need enough earned income to make the traditional contribution.
Dottie57
Posts: 12349
Joined: Thu May 19, 2016 5:43 pm
Location: Earth Northern Hemisphere

Re: Move Roth Principle To Traditional Solo 401k

Post by Dottie57 »

Lou354 wrote:As far as I know you can't convert Roth IRA contributions to a traditional 401k. What you can do is withdraw the Roth contributions and make new pre-tax contributions to your individual 401k, subject to an annual contribution limit of $54k ($60k if age 50+). You'd get a tax break now but you'd be missing out on the tax-free growth between now and when you do the backdoor Roth conversions in your low income years, and that's assuming backdoor Roth conversions are even permitted at that future date.

Tax free growth is great. I wouldn't move your money.
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