I have a 401k that I contribute too that was opened with an previous employer. My new employer does not match my contributions. Can I convert this to a Traditional IRA and then in 2010 convert to a Roth and grow tax free.
Clifford
Can I convert a 401k to a traditional IRA?
I have a 401k that I contribute too that was opened with an previous employer. My new employer does not match my contributions. Can I convert this to a Traditional IRA and then in 2010 convert to a Roth and grow tax free.
Clifford
{ 4 comments… read them below or add one }
Tara
401k to tradiitional - yes
traditional to roth - yes
In fact, this is the only way you should do it.
QUOTE:
Assets cannot be converted directly from a 401(k) to a Roth IRA. The assets must first be rolled to a Traditional IRA and then can be converted from the traditional IRA to the Roth IRA.
Had you moved the assets directly from the 401(k) to the Roth IRA, you would have a big mess to clean up…and would probably lose the tax deferred status of your assets it was too late for any corrections.
James
Yes you definitely can.That is exactly what I did 4 months ago.You can go to your brokerage company and open a traditional IRA account on line or on the phone.Then they will send you forms to fill out,fill them out send them back. (You can open one on the internet if you do not have one,I am using TDAmeritrade and they have great service).After you open a Traditional IRA Account,you go back to your 401k and tell them to make the check payable to YOUR BROKERAGE FIRM.And then they mail the check to YOU, payable to the company (Showing all your details on it).All you have to do is once you receive it you forward it to your brokerage company and in 4-5 days you see your new account credited with your old 401k amount,which is now your new traditional IRA.
Carrie
Yes you can make the conversion from a 401k to a tradional IRA. And you can convert a traditional IRA to a Roth IRA at any time. You do not need to convert the whole thing at once. You can covert a little each year so as not to bump yourself into a higher tax bracket.
Kelly
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