Old 401K into IRA to Roth

Yes. That is correct.

Not knowing anything else about your present financial processes, 2 points of consideration:

1. "Taxable Amount: The amount converted is added to your taxable income for the year, which may push you into a higher tax bracket."

Potential solution is to convert portions of the IRA in an annual method. The tax code is extremely favorable currently, even into the 22-24% tax arena.

2. Pay closer attention:

"Five-Year Rule: Withdrawals of converted funds within five years may incur a 10% penalty if you are under age 59½."

And this:
You must wait five years from the date of conversion to withdraw converted contributions without penalty, regardless of your age.
If you are over 59½, you can withdraw the converted contributions without penalty after the five-year period.

This can be confusing!

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You must wait five years from the date of conversion to withdraw converted contributions without penalty, regardless of your age. If you are over 59½, you can withdraw the converted contributions without penalty after the five-year period.

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Not exactly correct

If over 59.5, you can distribute Roth without penalty once you have had a Roth IRA for 5 years.


So if you convert into an old Roth and are older than 59.5 you might be fine from the jump

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This can be confusing!

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Oh yes.

I'm 42. If I'm reading this correctly, the only thing that I need to consider is if the amount I'm converting from 401k into traditional IRA and then from traditional IRA into Roth will push me into next tax bracket.

Is this separate from the tax I'm going to pay for the amount that I'm moving to Roth since it wasn't taxed prior in 401K?

I still have 20 years before I touch this money.

I already have traditional IRA. I contributed my 7K for this year during the tariffs and moved into Roth. I did this for both my wife and me

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Is this correct?

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Yes that's correct; it's not a backdoor. It's called a "roth conversion". This is another reason why I think a trad 401k is better than a roth 401k especially if you are in peak earning years.

Because with a trad 401k, you still have the option to do the roth conversion later. Ideally you do this when you retire early (or low income years) before taking SS/pension. This lets you pay lower taxes than if you had done a roth 401k at the start. If you do a roth 401k, you've locked in taxes and there is no other option.

Also roth conversions count toward minimum eligibly income for ACA insurance if you're looking to retire before 65. Fyi some states require a minimum amount of income to get an ACA plan; otherwise you have to go Medicaid or private insurance.

https://www.bogleheads.org/wiki/Roth_conversion

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I'm 42. If I'm reading this correctly, the only thing that I need to consider is if the amount I'm converting from 401k into traditional IRA and then from traditional IRA into Roth will push me into next tax bracket.

Is this separate from the tax I'm going to pay for the amount that I'm moving to Roth since it wasn't taxed prior in 401K?

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The roth conversion is just treated as additional income. The conversion amount will be taxed at the marginal income rate.

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If I'm reading this correctly, the only thing that I need to consider is if the amount I'm converting from 401k into traditional IRA and then from traditional IRA into Roth will push me into next tax bracket.

Is this separate from the tax I'm going to pay for the amount that I'm moving to Roth since it wasn't taxed prior in 401K?

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Transferring your account balance from a 401(k) account directly to a Traditional IRA account is not taxable.

Transferring (ie. CONVERTING) a 401(k) account balance OR a Traditional IRA account balance to a Roth IRA account will invite income taxes to be calculated on the converted amount.

The converted amount is added to your gross income at tax filing time, and an income tax is due. Thus, a conversion over time could be more beneficial if it keeps your income from jumping into a higher tax bracket.