Author Topic: Should I roll my 401K into a Roth IRA?  (Read 340 times)

LiseE

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Should I roll my 401K into a Roth IRA?
« on: August 27, 2019, 10:12:24 AM »
Just received a severance package today at work. It's all good .. been here 20+ years .. the package was very generous .. in good shape financially .. time for a new adventure!  But my question is what to do with my 600K 401K.  I absolutely must roll it out because their are only 4 options to invest in and the performance has been horrendous.  But do I roll into a Roth 401K?  I guess I'm going to get hit with a sizeable tax hit since we're in the 22% tax bracket.

Do the income rules apply for a rollover to Roth IRA?  We have not been able to start a ROTH because of high salaries.

Thanks in advance for any advice.

Lisa

RWD

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Re: Should I roll my 401K into a Roth IRA?
« Reply #1 on: August 27, 2019, 10:23:52 AM »
It's a pre-tax 401k, right? Roll it over into a traditional IRA, then there is no tax hit.

bw_94

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Re: Should I roll my 401K into a Roth IRA?
« Reply #2 on: August 27, 2019, 10:47:12 AM »
Yeah, definitely roll it into a traditional IRA. You don't want to take that tax hit!

BlueHouse

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Re: Should I roll my 401K into a Roth IRA?
« Reply #3 on: August 28, 2019, 08:23:19 AM »
Are you going to get another job or are you done?  If starting a new job, check to see the new company 401k options and see if rolling it into the 401k is beneficial.   Then, start saving even more with a back-door Roth IRA. 
I'm saying to hold off on rolling into a traditional IRA in case you want to start a Roth IRA due to the pro-rata rule.  If you want to start a back-door Roth IRA, then you'll want to roll your 401k into another employer's 401k, not an IRA. 

ecchastang

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Re: Should I roll my 401K into a Roth IRA?
« Reply #4 on: August 28, 2019, 08:29:58 AM »
It's a pre-tax 401k, right? Roll it over into a traditional IRA, then there is no tax hit.
This!