[USER]

I need help. Please be kind. I’m new to this.
I’m planning to roll over both my 401k & roth 401k from my previous employer to my roth ira.

Is it ok to roll over directly to my roth ira? They gave me 2 cheques both for pre & post tax 401k.

There is no problem for roth 401k since it post tax.
But for the regular 401k he told me I need to do conversion & declare it as income to pay the due tax.

Is it ok to deposit both to my roth ira now then I will just pay the tax for the 401k next tax filing since I’m done filing my tax last month.

Thank you.

[Rose]

I was always under the impression that IF I am sent a check to be sure it’s payable to the new company or new account and not payable to me only instead have the money transferred directly to the rollover account solely to avoid a tax event.

I would call the company you are moving it to & ask if you can still do a ROLLOVER. I am always clear what my intention is as I don’t want to use the wrong term.

For example, Hello Vanguard, I left employer A, I want to move my 401K from them to a Roth IRA.

What is the least taxable option & best way to do this?

I know just enough to be dangerous, do some research quickly & make a call!

From Investopedia
“Regardless of the size of your earnings, you need to do the rollover strictly by the rules to avoid an unexpected tax burden.

Since you haven’t paid income taxes on that money in your traditional pretax 401(k) account, you will owe taxes for the year when you roll it over into a Roth IRA.

However, once you’ve paid the taxes and your money is in the Roth IRA, you won’t pay taxes on it again at withdrawal time.”

[Wallace]

What is your adjusted tax rate? Long term it makes sense, but can you afford the tax hit?

One major advantage to Roth is no mandatory RMD’s.

[Frank]

No one can answer your question without knowing anything about the amounts involved or the rest of your tax situation.

But basically if the amounts are small, you are usually ok just dealing with it next year.

If they are large, you should make a quarterly payment in June.

But if they are large or your other income is high, you should not be converting the traditional retirement account to a Roth and should instead just rolling it to a traditional IRA.

[Bill]

In general, you roll the Roth to Roth and traditional to traditional.

Going from traditional to Roth is called a conversion and is taxable.

[Author]

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