Roth 401k Rollovers
Will the president’s proposal to eliminate “back door” contributions to Roth IRAs possibly affect high income earners who make contributions to Roth 401k and subsequently roll the funds over to a Roth IRA?
Will the president’s proposal to eliminate “back door” contributions to Roth IRAs possibly affect high income earners who make contributions to Roth 401k and subsequently roll the funds over to a Roth IRA?
Permalink Submitted by Alan - IRA critic on Wed, 2015-02-25 00:04
No, because the Roth 401k is initially a Roth contribution from the start. While the proposal is unlikely to get to first base, it would probably stop conversions of after tax TIRA basis. That would in turn create an incentive to contribute to the Roth 401k which can be done irrespective of modified AGI. The Roth 401k rollover to a Roth IRA is not a conversion, just a rollover and it is the only option other than keeping the Roth 401k in an employer plan forever.