conversion from a 401(k)

Submitted by Arthur Dicker on Sat, 2015-12-19 20:37

1. Can a 401(k) participant who has retired withdraw an amount from the 401(k) and then deposit it into a rollover IRA within 60 days? Or does the transfer have to go directly from the 401(k) account to the rollover IRA trustee-to-trustee?
2. Can the 401(k) participant transfer an amount from the 401(k) directly to a Roth IRA?
Thank you,
Art



Submitted by Alan - IRA critic on Sat, 2015-12-19 20:47

  1. The participant can roll over a distribution from the 401k except for the portion that is an RMD. The distribution will be subject to 20% mandatory withholding (except on RMD portion), so the participant will have to come up with that 20% from other money to make the rollover complete.
  2. Yes. There is no mandatory withholding for this but taxes will be due on the taxable portion. If participant converts too much, such a direct rollover can still be recharacterized back to a TIRA by the deadline.

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