401k to Roth IRA conversion ladder with Schwab

[AlanStache]

I am trying to start a 401k to Roth IRA conversion ladder with Schwab.  After some back and forth in chat I have not been able to get the forms I need to fill out, Schwab chat guy did give me a number to call who might be able to help - not hopeful.  Also emailed the 401k administrator to see if this is something they can do, cant log into there site as I forgot the password or user name (was not in my manager, have logged in there like twice before, resetting that is a second problem). 

I normally access all accounts via Schwab; I have a Roth IRA created with Schwab.  The 401k was from a previous employer, it has been self directed for years but still has some nebulous fourth party administrator that charges me fees. 

Has anyone done a 401k to Roth IRA conversion ladder with Schwab?  How did you do it, what forms were needed?  Thanks

[falk]

I haven't done one with Schwab, but my guess is that the steps will be.

1. Create a Traditional IRA account.
2. Create a Roth IRA account.
3. Fill out form for 401K Transfer for the from and to vendors. Make super sure the 401K that the check is made out to the IRA c/o your name. You don't want to accident get a huge distribution and 10% penalty. I find that 401K stuff typically can't be done electronically.
4. Follow up with 401K and the IRA vendor. They will most likely miscommunicate and each will wait for the other to do something. It's up to you to bridge the two. At some point, they will probably mail out 2 checks. Check 1 will be for transfer to the traditional IRA. Check 2 will go to the roth. If you do not have after tax contribution, you will only have 1 check. Again, make sure the check is not made out to you and get counted as a distribution. It should go to the IRA c/o you.
5. Once you received your checks, sign and mail it. If you have a schwab branch, you can go to the schwab branch so you are not mailing thousands of dollar.
6. Once the money are in the IRA, you can initiate a Tradtional to Roth conversation.
7. Get tons of 1099R forms next year.

Note that this can take a while. You really need to follow up to shorten the time there are many steps at each vendor and it can get stuck. I think mines took a month (I didn't have roth conversion).

[reeshau]

Your phrasing of "401k to Roth IRA conversion ladder" is compressing several steps.  Do you know if your 401k administrator allows partial withdrawals?  They may not.  Also, is your 401k Roth now, or traditional?  Are there any after-tax contributions in the traditional?

What I would recommend is simply to roll over your 401k to and IRA with Schwab.  This should be very routine for both entities.  (And initiate it through Schwab; they are more motivated to take on your account than your 401k administrator is to drop it)  If you have any after-tax contributions, you can have them rolled over into a Roth immediately, without taxes. And you can only do that at the time of rollover.  Then, you can convert to Roth at your leisure.

This could have consequences if you are also doing a back door Roth IRA contribution.  All your traditional IRA balances count when considering taxable gains, even for IRA (but not 401k) accounts that are not the source of funds.  But, you only mentioned a Roth IRA, so no trouble with that.

[Catbert]

As reeshu noted you can't directly convert a traditional 401k to a Roth IRA.  If the person you're talking to is looking for those directions, they won't find them.  You will need to go from t401k to IRA to Roth IRA.  I hope you weren't trying to complete this year.  I think you are cutting it close.