Rolling an Old 401k to a Roth IRA
I know in years past, in order to roll a 401k to a Roth IRA it was required to roll the 401k to a Traditional, then to a Roth. However, I thought I heard that is now possible or will be to do a direct roll from a 401k to a Roth IRA.
In short is it possible to roll my 401k to a Roth IRA? If so, only the earnings will be taxable in the year of conversion, correct?
Permalink Submitted by Alan Spross on Mon, 2008-06-23 21:57
Yes, a direct Roth rollover is available as of this year, however note that the 100,000 income limit applies until 2010. Of course, this is a conversion and therefore is taxable to the extent the funds rolled are pre tax. In a pre tax 401k, the vast majority would be pre tax, so you would be taxed on much more than earnings.