17 votes

Employer offering Roth 401k as well as traditional 401(k), established in career

The Roth/Traditional decision is complex, but can be broken down into a set of simple rules. Ideally, you want to choose to tax your money at the lowest possible rate. This specifically refers to ...
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13 votes
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Where can I transfer rollover IRA funds to without it becoming income?

You will need to move it to a Traditional IRA if you want to avoid incurring any taxes in the current year. A Roth IRA is for after tax money. Also, you need to be very careful about how you do the ...
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  • 51.6k
12 votes
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Deductions greater than Income : Traditional IRA to Roth Conversion?

Yes. A most emphatic yes. I suggest you look at your 2014 return and project what 2015 will look like. I'd convert enough to "top off" the 15% bracket. Note, if you overshoot it, and in April 2016, ...
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10 votes

Roth 401k Contribution limits reset on job change

Rollovers are different than Contributions. You can rollover any amount as often as you want in every year, as it is basically just a transfer to an equivalent ('already taxed retirement') account. ...
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  • 37.1k
10 votes
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Why do Roth IRAs have income limits if you can just do a backdoor IRA contribution?

There used to be income limits on Roth conversions. They were eliminated in 2010 by the Tax Increase Prevention and Reconciliation Act of 2005, probably to increase tax revenue. This combined with the ...
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  • 14.7k
10 votes
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When rolling over a Roth 401(k) to a Roth IRA, does one have to pay any tax?

No, Roth accounts are from already taxed money, and changing the provider has no effect. The only tax you pay for Roth money is on the gains you made and only if you take it out before you are 59.5 ...
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  • 37.1k
8 votes

Employer offering Roth 401k as well as traditional 401(k), established in career

In addition to JoeTaxpayer's thorough answer, I just want to tackle one particular question that was also asked: ...all employer contributions are pretax? There are a few main reasons that ...
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  • 45.7k
7 votes

Will a Roth 401k rolling over to a Roth IRA allow the money to become penalty-free at withdrawl?

Yes, it is possible. Several things to remember: Penalty free withdrawal is for contributions only. Employee match is going to the Traditional (non-Roth) 401k Withdrawing from your retirement ...
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  • 131k
7 votes
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Roth 401k Contribution limits reset on job change

if I roll over existing Roth 401k to Roth IRA, will it allow me to put a full 18k in the new Roth 401k from the new employer? No. The contribution limit for one year is $18k for all employee ...
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  • 116k
6 votes
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2014 Traditional IRA Contribution that was not Deducted

Money in an IRA that has both deductible and non-deductible contributions in it is called mixed basis. Any withdrawal - including a conversion - must be taken proportionally from each category (after ...
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  • 35k
6 votes

Employer offering Roth 401k as well as traditional 401(k), established in career

(Really a comment on JoeTaxpayer's answer but it's too long) There's one big factor that for some people tips things strongly in favor of the Roth: While the limits on paper for traditional and Roth ...
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6 votes
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When doing a Roth conversion, is amount converted after tax?

All $30000 goes into the Roth IRA and you pay a separate tax bill of $3000. Or more specifically, it it taxed just like if your your regular income went up by $30000 (assuming the entire conversion ...
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  • 15.7k
6 votes
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Calculating tax on 401(k) to Roth IRA conversion

Pre-tax 401(k) to Roth IRA conversions are always taxed as regular income. Remember contributions to a pre-tax 401(k) come from income that has never been taxed, so they're taxed when you withdraw or ...
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  • 14.7k
6 votes
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Mega backdoor: After-tax 401k -> Roth IRA in employer's plan while having an existing pre-tax traditional IRA with a different institution

I'm guessing you heard about how an existing pre-tax Traditional IRA interferes with the regular backdoor Roth IRA. To avoid income limits on direct Roth IRA contributions, you first make a non-...
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  • 14.7k
6 votes

Do we need to consider the account balance as limit when converting from Traditional IRA to Roth IRA?

I do that every year. There is no limit on the amount you convert; the only consequence is the taxability - you will have to pay taxes for the gains you converted. At the end of the year, the provider ...
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  • 37.1k
6 votes
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Questions about transferring from Roth to Traditional IRA

What you are looking to do is called a "recharacterization" of your IRA contributions, and you are in luck; you still have time to recharacterize your 2019 Roth contributions. The idea is pretty ...
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  • 5,280
6 votes
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Possible to open multiple IRA accounts from the same institution?

Yes, you can. It is not needed in a scenario you described, but can be useful if, for example, you want different mixes of investments or different beneficiaries or something like that. For the ...
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  • 131k
5 votes
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Can you transfer a Roth IRA to someone else?

Yes. Dying works great for what you'd like to accomplish. The key point is that you need to specify a beneficiary (or multiple beneficiaries) on the account . When you meet your maker, the beneficiary ...
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5 votes
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Same day Roth IRA conversion but lost some money -> How do I list that on my taxes?

You don't. Say you deposited $5000. Then you converted $4950 to Roth. You declare $4950 as the amount converted and you're done.
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5 votes
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Can I still convert a tradtional IRA into a Roth IRA for my 2016 taxes?

No. The "last year" choice is for new deposits. i.e. I have until tax day this year to make the deposit for tax year 2016. Conversions are made as of the date they occur, in other words, a ...
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5 votes
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If I have a 401k and a traditional IRA, am I at risk of paying double taxes if I convert to a Roth IRA?

You won't end up being double taxed. The money in your Traditional IRA can be grouped into three categories: Deductible contributions Non-deductible contributions Earnings If you convert the entire ...
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  • 14.7k
5 votes
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Is there any upside in electing to have federal taxes withheld during a traditional IRA to Roth IRA conversion?

Typically, a conversion from IRA to Roth IRA is a taxable event, so you should expect to owe taxes at the end of the year. Unless you plan your tax load and know what you're doing, this can end with ...
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  • 37.1k
5 votes
Accepted

Does a pro-rata backdoor Roth IRA conversion come from each IRA proportionally or just the one being converted?

The post-conversion balances would look like A: Deductible IRA: $5000 Non-Deductible IRA: $0 Roth IRA: $5000 The brokerage has no idea how much of your IRAs are deductible, and are just going to do ...
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  • 14.7k
5 votes

Converted $1 more than the IRS limit when doing backdoor Roth conversion

There is no penalty or limit on conversions, ever. You can convert a million (if you manage to have in your IRA, which is hard to do), and only pay taxes for it, no penalty, so you are clear of ...
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  • 37.1k
5 votes

Where can I transfer rollover IRA funds to without it becoming income?

Yes, you can move it to a Traditional IRA per JohnFx's answer without incurring penalties. However, one big thing to note is that if a future employer offers a 401k and you wish to move your money ...
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  • 6,662
5 votes
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Does 'Taxable Income' from a Roth conversion count as income source for IRA contribution?

The sum of your (Traditional and Roth) IRA contributions cannot exceed your "taxable compensation" for the year. (Or, for spouses filing as Married Filing jointly, the sum of both their IRA ...
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  • 15.7k
5 votes
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Automated/Least Painful Backdoor Roth IRA + Nuanced Questions

You don't have to open and close a traditional IRA every year. You can create one, convert everything so it's empty, but leave it open until next year. But doesn't make a big difference because ...
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  • 14.7k
4 votes
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Is there a limit to how often you can convert a Traditional IRA to a Roth IRA within a given time period?

You can convert additional amounts from Traditional IRA to Roth IRA as often as you want. What there is a limit on, is "reconversion" -- if you convert to Roth IRA, then recharacterize it back to ...
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  • 15.7k
4 votes

Should I convert from IRA to a Roth IRA based on an online calculator?

You are in an interesting income range. At 59, do you have a good idea what your Social Security benefit(s) will be? If so, you need to take that into account. Some time ago, I wrote an article titled ...
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4 votes
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Are Roth IRA withdrawals within the same year as contributions tax free?

Withdrawal of a contribution (plus earnings) before the tax filing deadline is penalty-free. (But withdrawing contributions on a Roth IRA is always tax-free and penalty-free anyway, so the only ...
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  • 15.7k

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