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Learning, Sharing, and Teaching => Investor Alley => Topic started by: chasesfish on November 02, 2013, 09:08:53 AM

Title: Account Type Question: 401k/Rollover IRA 72t and Backdoor Roth
Post by: chasesfish on November 02, 2013, 09:08:53 AM

I have a question that might be dumb, but I can't find the answer anywhere:

Is a 401k account treated the same as a rollover IRA for the purpose of either a 72t or Roth Conversion?

I have a 401k, my wife has a rollover IRA that's a combination of a former employer's 401k and Simple IRA.

It'll also make a difference on where I leave the money after I quit my job.

Title: Re: Account Type Question: 401k/Rollover IRA 72t and Backdoor Roth
Post by: Abe on November 02, 2013, 09:18:01 AM

401k qualifies for 72t withdrawals:

http://www.irs.gov/Retirement-Plans/Plan-Participant,-Employee/Retirement-Topics---Tax-on-Early-Distributions

Title: Re: Account Type Question: 401k/Rollover IRA 72t and Backdoor Roth
Post by: chasesfish on November 03, 2013, 07:08:39 PM

Thank you, it looks like both qualify.

Title: Re: Account Type Question: 401k/Rollover IRA 72t and Backdoor Roth
Post by: Nords on November 04, 2013, 08:24:13 AM

Quote from: Abe on November 02, 2013, 09:18:01 AM

401k qualifies for 72t withdrawals:
http://www.irs.gov/Retirement-Plans/Plan-Participant,-Employee/Retirement-Topics---Tax-on-Early-Distributions

I didn't know you could do a 72(t) directly on a 401(k).  I thought you had to roll it over to a conventional IRA first.

Is this one of those weird situations where the tax code says it's permitted, but the 401(k) custodian still has to provide for the feature and be willing to do the paperwork? 

Even so I think I'd rather do a honkin' big rollover and my own 72(t) rather than trust it to the benevolent oversight of the 401(k) administrator.