Transfering from 401k to traditional IRA to Roth IRA
I am still employed and have a significant balance in m 401K plan. Can I transfer some of this into a traditional IRA and then convert it into a Roth IRA in 2010 even though I am still employed and not taking any distributions from the plan at this time. I am 57 years old now. If I can’t do this now can I do it when I turn 59 1/2 even if I am still employed?
Permalink Submitted by Alan Spross on Mon, 2009-06-22 04:31
Whether you are allowed “in service distributions” from a current plan is specific to that plan. Most plans do not allow it other than meeting an age such as 59.5. Obviously, loans and hardship distributions are often allowed, but those cannot be rolled over. Once you find that in service distributions are allowed, you might be able to roll them directly to a Roth IRA rather than first to a TIRA. This is particularly advantageous if you happen to have pre 1987 after tax amounts in your plan, which can be converted tax free since they can be distributed without any pre tax dollars in addition. So check with your plan administrator if and when any in service distributions are allowed.