Roller Tradition IRA to 401K
I have a traditional IRA of 100K (currently 60% in stock and 40% in cash). 15K of it is basis. I would like to roll it into my company 401K. I am have been with the company for a while so I am not new (not sure if this matters). The reason why I am posting this thread is because I am getting some conflicting info. Hence, I hope to get a definitive answer from the experts out here. From my own reading, I understand that I can roll the 85K tax deferred portion of my traditional IRA into the 401K. The 15K will have to stay in traditional IRA. However, I spoke to a representitive from my 401K administrator today. She told me the entire 100K can be rolled over into the 401K. I want to know which one is right. I just want to make sure I don’t make any unnecessary mistakes.
Permalink Submitted by Alan - IRA critic on Fri, 2013-02-15 23:42
The administrator better re check the rules. A 401k plan is not allowed to accept IRA rollovers of IRA basis (the 15k). Doing so would subject the plan to corrective action, possible penalties, and in the worst cases possible disqualification. She better re check any IRS portability chart and it will clearly indicate that IRA basis cannot be transferred into a qualified plan. This is also stated in Pub 590, under “Rollovers” -“kinds of rollovers from a traditional IRA”.
Permalink Submitted by Gregg Solinas on Sat, 2013-02-16 01:20
Alan, thank you so much for confirming my suspicion. I will definitely talk to them (hopefully someone who understand rollover better) again. I do have a follow up question for you. For the 15K remaining in the traditional IRA, if I convert it to a Roth. Will I be able to roll into the Roth 401k portion of my plan. Since the 15K is basis, roll over from traditional IRA to Roth should not trigger any tax implication. What do you think? Again, I appreciate all you help and advise.
Permalink Submitted by sydney p on Mon, 2013-11-11 14:59
Alan, not trying to invade a forum thread but I am new to the site. I posted a question related to an issue that I am having. I think I titled the post IRA Pickle. Are you able to provide some assistance to this unique question. Thank you so much. It appears that you are the resident guru. Thanks, again. Sydney
Permalink Submitted by Alan - IRA critic on Sat, 2013-02-16 02:10
You can roll over the remaining 15k of basis into your Roth IRA tax free. However, you cannot roll the Roth IRA into your Roth 401k plan, nor can you roll the 15k left in your TIRA directly into the Roth 401k plan instead of your Roth IRA. The Roth IRA has some more favorable tax rules than the Roth 401k, so your funds are better off there. Note that you will probably have to sell your stock investments before rolling the pre tax funds to your 401k, but check with the plan administrator on that.
Permalink Submitted by Gregg Solinas on Sat, 2013-02-16 03:20
Thank you for your help.
Permalink Submitted by avril mathew on Mon, 2013-11-11 05:51
With all the not so great news going around nowadays, people who have 401(k) policies have some great news. Earnings on 401(k) policies have been sneaking up over the past year according to press announcements from numerous outlets.