Under what circumstances can I rollover my 401k plan into a Roth IRA?
Also note, I max out my Roth IRA contribution each year - so the rollover can’t be treated like a contribution either.
My current broker for my Roth IRA is Scottrade. They have no idea how to handle the situation. Last time, they treated my rollover as a cash contribution.
Can I rollover into a traditional IRA if I already maxed out my Roth IRA for the year?
Roger
{ 4 comments… read them below or add one }
Sharon
You can’t rollover directly to Roth. You must rollover to traditional or a “rollover” IRA. That’s because 401K is taxable at distribution, Roth is not. New tax laws will allow an easier conversion to Roth if you choose to do that. You will owe tax on original tax deductions taken. Might be a big nut. I believe you would be allowed to spread tax due over several years. Wait for tax law changes to come through….Bush may sign bill next week. Best way to handle it would be to call your custodian of current Roth account and ask about procedure.
Milton
Never. You need to hit a traditional IRA first and then convert.
Brian
that’s why scotttrade is so cheap….you get what you pay for.
As other posters said…wait for tax law changes to allow you to rollover from 401k into Roth IRA. Right now you can’t do it but down the road you will be able to.
Question is why would you want to? Best to have both kinds (pre-tax and Roth) of accounts so that you can manipulate your distributions to minimize your tax hit. No guarantees that tax rates are going to be greater or lower than they are now…so hedge your bets.
Assuming that you are no longer employed and you are looking to rollover your 401k at your old employer you simply roll the 401k into the traditional IRA. That will not count as an IRA contribution. At that point, if you so choose, you convert to the ROTH and pay the taxes. Again, it shouldn’t count as a contribution. Fact that you’ve already maxed should have no bearing on either transaction.
Dan
right not have to go to a regular ira -=-= but atter 2008 the laws will change than you do it easy!!!
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