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401k Rollover Question
Posted on 1/18/21 at 8:54 pm
Posted on 1/18/21 at 8:54 pm
Switched jobs (30 yo) for first time and have about $75k in my 401k. The majority of it is roth 401k but about $25k is traditional which is taxable. There is also about $18k of taxable in my roth 401k which I assume is from matching? Will I pay taxes on the taxable part of my roth 401k if I roll it over to a roth IRA? Is my best option to roll everything over to my roth IRA and pay the taxes now? Will I only have to pay taxes on the non-roth 401k and is there any loophole/way around that? Basically, am I missing anything here as its a lot of money and don't want to mess this up.
This post was edited on 1/18/21 at 8:57 pm
Posted on 1/18/21 at 9:01 pm to LSUDbrous90
Roll the traditional to a traditional IRA and the Roth to a Roth IRA. You shouldn’t have to pay taxes on any of it
Posted on 1/19/21 at 7:51 am to whiskey over ice
Is there any reason not to roll it over all to a roth IRA and just pay the taxes now?
Posted on 1/19/21 at 9:36 am to LSUDbrous90
Because you’ll have to pay taxes now
Posted on 1/19/21 at 9:59 am to LSUDbrous90
Well on his taxable amount that’s a little over 9k (assuming 22%) in taxes. Rule of 72 that out and that’s $144k lost by the time he’s 62. Even if taxes are 80% he will still keep 3.2 times what he would pay in taxes right now.
This is to those that say pay the taxes now and roll to a Roth.
This is to those that say pay the taxes now and roll to a Roth.
This post was edited on 1/19/21 at 10:00 am
Posted on 1/19/21 at 11:15 am to whiskey over ice
You say that as if it is a bad thing lol. Any reason not to pay the taxes now other than a matter of preference on tax now or tax later?
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