taxes or penalties on a profit sharing plan rollover to a Roth
Client needs to rollover approx. 3k from her previous employers profit sharing plan.
Is it okay to have the rollover directly into a Roth IRA, which she know she will pay taxes on the 3k (1099 next year)?
or
if we do this she will have any 10% penalty or penalties at all or is not allowed?
Thank you,
Douglas
Permalink Submitted by Alan - IRA critic on Thu, 2015-02-26 23:17
A direct rollover to the Roth IRA is called a “qualified rollover contribution” and has been permitted since 2008. There is never a penalty just as there is no penalty for a Roth conversion. Rolling over directly saves a step, and the rollover can still be recharacterized to a TIRA if client wants to later on.