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Financial Planning / Tax Strategies
|Subject: Re: Post Fiscal Cliff IRA Conversions||Date: 1/6/2013 6:35 PM|
|Author: blm||Number: 117308 of 122849|
There seems to be some confusion about this provision. In-plan "conversions" to Roth have been allowed previously. This is just housekeeping to make them easier, thus, in theory, more attractive so that people will flock to them, thus producing the revenue necessary to "pay" for kicking the sequestration can 2 months down the road.
Nothing of note to the employee has changed in the law.
I was under the impression that previous in-plan rollovers required the money to be distributable (employee over 59-1/2, for example), while the provision in the fiscal cliff legislation basically lets anyone do the rollover. Is that not the case? If it is, that seems like a significant change.
Also on in-plan rollovers, if I've contributed a mix of pre-tax and post-tax money to my 401k, would a rollover be handled the same as a TIRA to Roth rollover that includes pre- and post-tax money (i.e. prorating the taxed vs. non-taxed amount)? I'm guessing yes, but so far my Google-fu has failed to turn up a definitive answer.
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