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re: Paying taxes on a 401K in plan Roth IRA conversion. (converting stock to Roth)
Posted on 2/20/13 at 11:13 am to BOSCEAUX
Posted on 2/20/13 at 11:13 am to BOSCEAUX
That is the big benefit of the Roth.
You can pull your contribution (what you paid taxes on) no questions asked and no taxes paid.
However, as it is a conversion rather than a direct contribution there *might* be a 5 year seasoning period.
The earnings it makes are also tax free if it is a qualified distribution. You'll only pay taxes/penalties if you are pulling earnings for non qualified distributions.
IMO the best reservoir for your 6+ months of expenses is a Roth.
You can pull your contribution (what you paid taxes on) no questions asked and no taxes paid.
However, as it is a conversion rather than a direct contribution there *might* be a 5 year seasoning period.
The earnings it makes are also tax free if it is a qualified distribution. You'll only pay taxes/penalties if you are pulling earnings for non qualified distributions.
IMO the best reservoir for your 6+ months of expenses is a Roth.
This post was edited on 2/20/13 at 11:18 am
2
Posted on 2/20/13 at 12:37 pm to Siderophore
Thanks for the info guys.
Posted on 2/20/13 at 12:38 pm to Siderophore
Is there a way to spread the tax hit out over a few years?
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