employer-sponsored plan to roth IRA
hi,
is rollover or conversion the correct description for the move from an employer-sponsored plan (e.g. 401k, sep IRA, etc.) to a roth IRA? for example, which of the two statements below is correct, or are they both accurate?
thanks,
chad
In addition to traditional IRAs, eligible employer-sponsored retirement plans, such as 401(k)s or SEP-IRAs, can also be converted to Roth IRAs.
or
In addition to traditional IRAs, eligible employer-sponsored retirement plans, such as 401(k)s or SEP-IRAs, can also be rolled over to Roth IRAs.
Permalink Submitted by Alan Spross on Fri, 2009-09-04 22:13
Each statement is accurate in a broad general sense, but there are a few exceptions where one would be a better term than the other.
Conversion means that the source funds were not in a Roth account previously.
If Roth IRA funds or designated Roth accounts in a QRP were moved to a different Roth IRA account, these would be not be conversions, but would be done by transfer, direct rollover or indirect rollover, so the term “conversion” would not be used to describe these transactions. Conversely, if a TIRA was simply re designated as a Roth IRA by the custodian (fairly rare), there would be no transfer or rollover, but you would still have a conversion.
In these statements, it would be better to substitute govt 457b or 403b for SEP IRA because a SEP IRA is already a form of traditional IRA.
Permalink Submitted by chad bollenbach on Tue, 2009-09-08 17:47
thanks alan, that’s very helpful!