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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)??
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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
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I just found your post, without any responses. There is no limit for your rolling over your 401k to an IRA. Do a trustee to trustee roll over. Find yourself a discount broker and they can help you with the process. DO NOT TAKE POSSESSION OF THE MONEY. THE IRS REQUIRES A 20% WITHHOLDING AND YOU HAVE ONLY 60 DAYS TO GET THE CHECK INTO THE ACCOUNT. To convert to a Roth, you must meet the modified income earnings requirement which I think is $100,000 for the year you make the convervsion. There is no limit to how much you can convert if you meet all of the requirments. Check IRS publication 590 for details. You need to find the money for the taxes from other sources in order for this to make economic sense. Unless you started a Roth back in 1998, you will have to wait 5 years before you can withdraw any of the converted money. So you will a source of income to meet your retirement needs. I hope this helps you. Make your rollover to an IRA, then you can convert gradually if pay the taxes is a problem.
If you have more questions feel free to contact me at gstipps@iquest.net
glenn
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