Message Font: Serif | Sans-Serif
 
No. of Recommendations: 0
Greetings, Pinballjs, and welcome. You asked:

Does anyone have the scoop on any $$ limitation on transfers of from a 401(k) from a former employer to an IRA, then to a Roth IRA? I'm retired and want to move my 401(k) money from the prior er plan to a Roth Ira, but I'm advised that I need to move it to an IRA first, then to the Roth. Is there a $2k (or other$) limitation per year on such transfers ??? If so, any short cuts(legal ones that is)??

There are no shortcuts. By law, you may not transfer money from a employer's retirement plan like a 401k to a Roth IRA. A Roth may accept transfers from a traditional IRA or another Roth IRA only. Therefore, you must first move the money to a traditional IRA. There is no limit on how much you may move in doing so.

Once the money is in a traditional IRA, it may be further transferred to a Roth -- PROVIDED that in the year of transfer your adjusted gross income (not counting the money that will be transferred) does not exceed $100K. On transfer, all the money in the traditional IRA that you moved to the Roth must be declared as income and taxed.

I urge you to examine this issue carefully. In general, it's a poor move move for retirees. Much depends on how you will pay the taxes due, how long the money can stay in the Roth before you must use it for income, and the size of your estate. Do not do this until you analyze the situation fully. I have seen very few conversions to a Roth that make sense for a retiree.

Regards..Pixy
Print the post  

Announcements

What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.