Roth 401(k)
If some IRA’s can be rolled over or converted to a Roth IRA, provided all taxes are paid for contributions to the IRA and any gain while in the IRA, why can’t a standard 401(k) be rolled over or converted to a Roth 401(k)? My company has offered a Roth 401(k) option since 01/08.
Thanks,
Marty
Permalink Submitted by Alan Spross on Wed, 2008-11-26 19:44
My guess is that Congress did not want employer plans to have to deal with recharacterization issues like you would run into if conversions were offered between the two options. Note that you cannot recharacterize a regular contribution either between the pre tax and the Roth option.
This year with the market crash, a high percentage of Roth IRA conversions are being recharacterized to eliminate the tax on values that have disappeared. If employer plans offered these, they too would be up to their necks in processing recharacterizations for market losses in addition to those due to exceeding the 100,000 income limit.
What you can do is to change your allocation of future contributions more toward the Roth option. Plans differ in how often you are allowed to change these allocations.