10-31-2007, 03:25 PM
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#1 |
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Greenhorn
Join Date: Jul 2006
Posts: 31
Rep Power: 6  |
if someone wants to roll overtheir 401k into a roth ira?
if someone wants to rollover their 401k into a roth ira their pretaxed 401k money will have to be turned into after taxed money durring the rollover to the roth ira. Is this money going to be taxed at the normal income tax rate for the individual so if you are in a 15% tax bracket would it be taxed at 15%. Or is it going to be claimed as ordinary income at the end of the year and taxed accordingly, in which case would be 50,000 salary plus 120,000 rollover would equal a taxable income of 170,000 which would equal a 35% tax bracket.<br /><br />The money needs to be put in a roth ira because the preffered tax deffered retirement vehicle is a matching 401k so a traditional ira is not a option as the 401k will be kept to receive the employer contribution<br />
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04-24-2008, 12:42 PM
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#2 |
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Super Moderator
Join Date: Aug 2006
Location: West Coast
Posts: 773
Rep Power: 7 |
it is going to be taxed at a rate of ordinary income for the total amount. it would be considered having 170k in total income and would raise your tax bracket.
consider consulting a tax professional regarding anything like this. |
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06-26-2008, 11:29 AM
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#3 |
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Piggy Bank
Join Date: Mar 2008
Location: pa
Age: 35
Posts: 77
Rep Power: 4 |
would the yearly contribution limit to IRAs apply in this case?
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06-26-2008, 11:39 AM
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#4 |
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Super Moderator
Join Date: Aug 2006
Location: West Coast
Posts: 773
Rep Power: 7 |
no, a rollover would not be included. you could still invest your annual $5,000. some companies even offer a Roth 401k. my account takes out a percentage of after tax dollars and saves it for me. plus i can still contribute $5,000 into a traditional Roth.
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