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3Cubs: "2014 was a tough year for our family because I faced unemployment. Since our income is much lower than normal, I thought I might make lemonade and convert an old 401(k). Here is my idea:

1. Transfer my old 401(k) out of the employer's plan to a traditional IRA.

2. Then roll some money from that new traditional IRA to a Roth.

3. I would look at my actual income in 2014 and convert as much as possible to the Roth to be at the top of the lower-than-normal tax bracket for this year.

Does this plan make sense? Please offer suggestions or feedback."


First, my sympathy on your difficult year.

Second, I am no tax expert, so you probably see if anyone else responds.

1. OK, make it a trustee to trustee transfer to avoid taking possession of the money.

2. Generally, but that would be a conversion not a rollover, and it will need to be completed before year end 2014 to be a 2014 tax event. Conversions have a year end deadline, unlike contributions. In addition, what funds will you use to pay the taxes due? If from the IRA, would you owe penalty for early withdrawal? And many people beleive that if using IRA funds to pay the taxes, then the conversion may make less sense, but you would need to run your numbers.

Regards, JAFO
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