401k and 403b Conversions to Roth

Submitted by Kenneth Meunier on Mon, 2011-09-19 22:45

Can 401k’s and 403b’s now be converted to a Roth 401k and 403b respectively while working, and can 401k and 401b be converted to a Roth IRA when the employee is no longer working?

Thank you,

KM



Submitted by Alan Spross on Mon, 2011-09-19 22:56

Generally, the answer is Yes to all of those.

Of course, the qualified plan must be amended to include a designated Roth option in the first place, and this is NOT a requirement. The plan also has the option to allow “in plan conversions” as of Sept, 2010.

Direct Roth conversions from qualified plans to Roth IRAs have been allowed for around 5 years now. If the qualified plan has a higher % of basis from after tax contribution than the TIRA does, doing a direct Roth conversion gets more dollars into the Roth per dollar of taxable income.

Submitted by Toby Hartley on Mon, 2013-10-28 21:32

As usual trying to use search option first. Case is: teacher, 51 and still working 35K in 403b and wants to start a new ROTH 403b, wondering can they also convert their 35K 403b to the ROTH 403b as well. They would probably do half this year and half next. I am reading conflicting answers online.   Doe the plan have to offer in-plan conversion or is it even an option without a qualifying event? 

Submitted by Alan - IRA critic on Mon, 2013-10-28 23:26

  • The IRS guidelines now allow these IRRs (In plan Roth Rollovers) without a a qualifying event for a distribution, but the plan does not have to offer this option. Teacher should check with the plan to see if they offer IRRs.
  • NOTE: My prior post of 9/19/11 was partially incorrect as of that time. Until this year there had to be a qualifying event making the employee eligible for a distribution before they could do an IRR. The legislation called ATRA at the end of 2012 eliminated this requirement, making it possible to do an IRR without a qualifying event as long as the plan offers them.

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