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401k to Roth IRA tax question
Posted on 5/9/13 at 1:42 pm
Posted on 5/9/13 at 1:42 pm
I'm going to be leaving my current job in the near future and will be rolling over my 401k. I have an existing Roth IRA that I would prefer to use instead of opening a Traditional IRA for the rollover. Ideally, I'd like the estimated tax bill to be withheld by the 401k company and the remaining amount rolled over. Does anyone know if this is a common practice or even possible? Or is it just wishful thinking. Thanks.
4
Posted on 5/9/13 at 7:28 pm to TigerTitleHunter
I think they will probably withhold at 20%. I doubt they will do anything fancy to help you out.
Posted on 5/9/13 at 7:35 pm to TigerTitleHunter
Not sure if you can go direct like that. You can definitely roll it into a traditional then do a Roth conversion. You will then be responsible to pay taxes on th econverted amount, but you can pay it over two years.
Posted on 5/9/13 at 7:39 pm to Janky
quote:
You will then be responsible to pay taxes on th econverted amount, but you can pay it over two years.
That's interesting. I assumed that the plan would be required to treat it as an early disbursement and withhold taxes.
Posted on 5/9/13 at 7:44 pm to TigerTitleHunter
To each his own but I wouldn’t do that. I would only roll it into a Roth if I had the money to pay the tax on the conversion. If I didn’t have those funds I would roll it over into a traditional IRA and continue to fund the Roth IRA going forward.
Posted on 5/9/13 at 7:53 pm to ZereauxSum
quote:
That's interesting. I assumed that the plan would be required to treat it as an early disbursement and withhold taxes.
Not in my scenario because you are rolling into a traditional IRA, therefore no taxes are due. Only the conversion is a taxable event.
This post was edited on 5/9/13 at 7:54 pm
Posted on 5/9/13 at 7:59 pm to TigerTitleHunter
Just take the money
Posted on 5/9/13 at 9:36 pm to Janky
quote:
You will then be responsible to pay taxes on th econverted amount, but you can pay it over two years.
Can't split the taxes over two years anymore. That was a one-time deal a year or two ago.
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