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I wrote in one question (mirror) that:

A traditional, pre-tax 401(k) may be rolled over to a traditional IRA or Roth IRA if older than 59.5-year-old or if leaving one's job.

Someone commented that:

You can of course convert a [pretax] 401(k) to a Roth IRA, without being 59.5 or leaving the job. I just did that.

How can one convert, penalty-free, a traditional, pretax 401(k) to a Roth IRA, without being 59.5 or leaving one's job? And, assuming such a conversion is possible:

  1. Does one have to satisfy the Roth IRA contribution criterion on how much one's earn (133,000 USD for single filers and 196,000 USD for married couples in 2017)?
  2. Does the conversion count toward the IRA contribution limit (5,500 USD in 2017)?

I am aware that there exist some exceptions to the early withdrawal penalty (10% in 2017):

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But I believe I have read somewhere one cannot use any of these exception to the early withdrawal penalty to contribute to the IRA.

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That would depend on your 401(k) plan having a so-called "in-service non-hardship withdrawal" provision. Your plan may instead or in addition have a "in-service conversion" provision which would accomplish essentially the same goal, except that your money would go into your Roth 401(k) instead of a Roth IRA, but of course it could be rolled over into a Roth IRA in the future.

The answer to your questions #1 and #2 is no for both. Rollovers and conversions are totally separate from contributions and thus are not subject to income limits (though they were in the past) or contribution limits.

  • Thanks. "That would depend on your 401(k) plan having a so-called "in-service non-hardship withdrawal" provision. " -> if my 401(k) plan has a so-called "in-service non-hardship withdrawal" provision, is there any early withdrawal penalty? – Franck Dernoncourt Nov 16 '17 at 1:12
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    @FranckDernoncourt No penalty as long as you are moving the money into another retirement account like an IRA. – Craig W Nov 16 '17 at 1:14

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