Had a 401(k). Made before tax contributions to it. Got canned. Moved 401(k) to Traditional IRA. Want to roll over IRA to Roth because I expect to be in higher tax bracket when I retire. Can I simply transfer this money this year and declare the balance as income on my tax return?(I transfered the 401(k) to traditional IRA in 2001.)
Talk to your IRA custodian. Usually they will do a Roth conversion for you. Either partial or total conversion is possible. They send you a 1099 for the funds converted and you then pay the income taxes. If the amount converted is large, you may need to pay estimated taxes and prepay the tax to avoid penalties for underpayment of estimated taxes.You may do a conversion in any year you have earned income and do not have income exceeding the upper limits--about $100K. Check the IRS publication on IRAs for details.
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