Trad. 401k Rollover to a Roth 401k
Could a person roll their Traditional 401k to a Roth 401k upon a job change (going from the Trad 401k at prior company into a Roth 401k at the new company). If so, would it benefit them to wait unitl 2010, so they could have 2 years to pay the taxes?
Permalink Submitted by Alan Spross on Wed, 2009-04-15 18:53
No, that cannot be done. There are no “conversions” allowed within a 401k plan from pre tax to designated Roth accounts.
However, the former employee should be able to do a direct rollover Roth conversion from the former pre tax 401k to a Roth IRA, and the Roth IRA has better aging rules vrs a Roth 401k and it has no RMDs. Therefore, if employee wants a Roth, he should convert to a Roth IRA. In 2009, the income limits apply. In 2010, the income limits are gone and the two year deferral is available.