The Motley Fool Discussion Boards

Previous Page

Financial Planning / Foolish 401(k)s


Subject:  Re: 401k Roll-Over question (Roth IRA) Date:  1/10/1999  9:04 PM
Author:  coates Number:  582 of 26154

My question is, how difficult is it to roll a traditional 401k into a Roth, and what can I expect as far as taxes, penalties, and ease of transfer?

You will want to contact a broker,or banking institution,and sign up for a trustee to trustee transfer to a traditional IRA. Look around and locate one that does not charge any fees and also make sure the investment options you want are available.

Once you have selected a broker and the transfer is complete, you can roll your traditional IRA to a Roth IRA. It is not complicated, just filling out forms.

You just missed the real opportunity that ended Dec.31,1998. If you would have done this prior to then you could have spread the tax liability over 4 years.

Now the entire balance of your 401k/IRA will be treated as a distribution and you will be taxed as such. The beauty of this process is that from now on the Roth IRA will compound tax free. Also if you are not subject to income limitations you may make annual contributions to your new Roth.

Hope this helps,
Copyright 1996-2018 trademark and the "Fool" logo is a trademark of The Motley Fool, Inc. Contact Us