Comments on: Can You Rollover Your 401k to a Roth IRA?

By: Richard Douglass

Richard Douglass — Thu, 20 Jun 2019 15:31:55 +0000

Hi Jeff. My company was acquired recently and the new owners have replaced Insperity (and their 401(k) option) with their own inhouse HR and Voya financials. I would like to roll my 401(k) from Insperity to my TD Ameritrade IRA but Insperity is refusing to release my account saying I still work for the same underlying company. I technically was terminated from the old entity and signed an offer sheet from the new. Isn’t that enough to clear me for transfer??

By: Mac | Personal Finance Blog

Mac | Personal Finance Blog — Thu, 01 Nov 2018 02:43:15 +0000

Rolling your 401(k) into a Roth IRA is looks like smart move. Thanks for this informative post, it’s very helpful. It’s true that before making any kind of decisions you need to weigh all the pros and cons and see if it really fits into your plan or not. Good work, keeping posting.

By: Jeff Rose

Jeff Rose — Wed, 10 Oct 2018 21:40:35 +0000

In reply to Tom. Hi Tom - I always advise a direct rollover from one plan to another to a) avoid withholding by the issuing administrator, and b) to completely avoid the possibility of your missing the 60 day rollover window. If you have the funds to make the rollover, you should be fine. As far as notifying your administrator, I can't tell you how they'll classify the distribution on the 1099, and if they'll accept your explanation. One thing you have in your favor no matter what is that at 66 you don't have to worry about the 10% early withdrawal penalty.

By: Tom

Tom — Wed, 10 Oct 2018 03:55:48 +0000

Good article. I have read several similar ones online and none address a question I have. I am, 66, retired, and looking into rolling my 401k into my Roth IRA ( which I have opened a while ago) over a period of years, to minimize the tax hit. The 401k and the Roth IRA are with different institutions. All of the articles I have found point to using a financial institution to facilitate the rollover. I can’t tell if this is a recommendation or a requirement. This seems to me to be unnecessarily complicated and also not very efficient, as it leaves the funds in limbo for a considerable amount of time. Why can’t I just take a 401k withdrawal yearly and then put that amount into my Roth IRA ?I just don’t see the need to make it any more complicated than that.

Also, I plan to do the withdrawal and deposit on the same day. Does anyone one care if I use other funds ( i.e not wait for the withdrawal check to clear) for the deposit, as long as the withdrawal and deposit are the same amount and the deposit does not supersede the w/d?

Finally, should I tell my 401k administrator that I’m planning to rollover the withdrawal to a Roth IRA so they can label the withdrawal properly in their system and send me the correct data for tax purposes?

Thanks for your response.

By: Jeff Rose

Jeff Rose — Sun, 08 Jul 2018 00:28:57 +0000

In reply to Anthony. Hi Anthony - You can do that, but you'll have to pay tax on the amount withheld to pay the tax. If you're under 59.5 you'll also have to pay the 10% early withdrawal penalty. Let's say you're moving $100,000, and holding back $20,000 to pay the tax. The $20,000 becomes fully taxable and also subject to the 10% penalty if you're under 59.5. Also, you'll lose a part of your retirement asset for good. You really should go over the numbers with a tax preparer to see if this makes financial sense. It might not in this case.

By: Anthony

Anthony — Tue, 03 Jul 2018 00:54:13 +0000

Are you able to use any of the amount that you transfer from the 401K to the Roth IRA rollover to pay the taxes you’ll owe for withdrawing that 401K?

Would it make sense to withdraw it all the way, keep some of the money to pay for taxes, and then deposit the rest into a Roth IRA as if it wasn’t even a rollover? I don’t have savings other than this, so wouldn’t be able to pay the additional taxes when come tax-filing season.

By: Jeff Rose

Jeff Rose — Wed, 04 Apr 2018 16:57:02 +0000

In reply to Scott. Hi Scott - Yes, rollovers and conversions have no dollar limit. The $5,500 limit is just on new IRA contributions.

By: Scott

Scott — Mon, 02 Apr 2018 18:37:31 +0000

In reply to Jeff Rose. Jeff Rose, your previous comment says, "The $5,500 limit applies only to new contributions, not to rollovers." Do you mean conversions as well?

By: Jeff Rose

Jeff Rose — Sat, 03 Mar 2018 17:08:20 +0000

In reply to Sally. Hi Sally - That's an institutional problem, meaning you have to go by the institutions proceedures. You can check with a CPA to find the specific rules and code section, and see if you can get written proof that they made a mistake. That MIGHT get it resolved in your favor, and it might not. The IRS gives institutions and employers some flexibility with retirement plans, and this may be one of them. It looks like the set a deadline of 12/22 to avoid last minute issues. They may be able to do that.

By: Sally

Sally — Fri, 23 Feb 2018 18:00:40 +0000

Just before 4 PM eastern time on December 29, 2017 I executed an online request for 401K money to be transferred into a ROTH IRA for the 2017 tax year and followed it up with a phone call to the 401K institution. I did it specifically because I needed to owe more money in 2017 in order to take advantage of a tax credit. Now I find that the rollover was coded for 2018 and the 401k institution claims that it should have been requested by 12/22/2017 – something that wasn’t specified in the documentation or by the person who assisted me over the phone. Because of my unique circumstance, this this error will be extremely costly for me in both tax years. I am told that there is nothing they can do. They cannot code it to 2017 or reverse the transaction. Do I have any recourse?? What are the IRS rules about coding a transferring from 401K to ROTH IRA to a particular year? Thank you!