2007-07-18 08:14:46 · 7 answers · asked by saved121599 1 in Business & Finance ➔ Taxes ➔ United States
If you roll your 401K into a Roth you will indeed have to pay taxes on it. You could roll it into a regular IRA without a penalty. Also, if you are under 59 1/2 you would more than likely have to pay a 10% penalty for rolling it into a Roth IRA.
2007-07-18 09:13:28 · answer #1 · answered by Anonymous · 0⤊ 2⤋
You are allowed to rollover your 401k directly to a Roth IRA. This is called a "conversion." You no longer have to use a regular IRA as a conduit.
Any pretax contributions, and all earnings, of the amount converted to the Roth IRA will be added to your other income subject to income taxes on the total. If the amount of the conversion is large, your tax bracket will probably increase.
Regardless of your age, you will not be subject to a 10% penalty upon the conversion. However, the holding period for a conversion is five years. This means that if you take a distribution from the conversion within five years, you will pay a 10% penalty if you are under age 59.5 at the time of the distribution.
2007-07-18 11:32:12 · answer #2 · answered by ninasgramma 7 · 0⤊ 0⤋
401K is pre-tax money and Roth is after tax contributions. so as that being stated. You pay tax on the 401K once you're taking the money out and you pay tax till now you positioned you earnings a Roth. so in case you roll it right into a Roth you will get hammered to the song of 30%. you may roll it right into a traditonal IRA or different contraptions. or only wait it out till you get your new pastime and roll it into their 401K.
2016-10-21 22:40:43 · answer #3 · answered by jochim 4 · 0⤊ 1⤋
You wouldn't pay a 10% penalty for early withdrawal, but you would have to pay income tax on the amount you rolled into a Roth from your 401K.
2007-07-18 15:43:27 · answer #4 · answered by Judy 7 · 0⤊ 0⤋
If your 401K is pretax (not a Roth 401K), you will have to pay the tax on it to put it into a Roth. If its a big amount, perhaps you'll want to roll over a portion each year.
2007-07-18 08:28:26 · answer #5 · answered by Chaney Lake Girl 2 · 2⤊ 0⤋
i take exception to the above answer i do nont think you can mix reg ira and roth funds -- one is pretax and the other is after taxes.
2007-07-18 08:26:49 · answer #6 · answered by Anonymous · 0⤊ 1⤋
No, you will not be penalized for rolling the money.
After you decide which company you want to work with for your IRA, they will handle the transfer for you.
*EDIT*After reading other responses, I misspoke above.
You would need to roll it into a regular IRA to avoid the penalty.
2007-07-18 08:21:13 · answer #7 · answered by mister_galager 5 · 0⤊ 2⤋