04-03-2004, 03:56 PM
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 Re: 401k rollover question "Uncle Milty" <bogusboy00[at]hotmail.com> wrote in message news:31a8dfcb.0404022039.57207efc[at]posting.google.com... - quote - > I recently left my previous employer. As I understand it, if I wanted > to roll that 401K into a Roth IRA I'd need to pay the tax since those > are pretax dollars. I worked in Wisconsin but we're moving to Florida, > which has no state tax. If I wait until establishing residency in > Florida before rolling over my 401K, will I still have to pay a state > tax (Wisconsin)? Would it be wise to roll over the 401K into Roth in > the first place? Thanks for the input. You can't roll a 401k directly into a Roth. You must first establish a Traditional IRA for the rollover. Then, if you wish, you can convert all or part of the Traditional to the Roth. Is it wise to do so? There are various opinions on this, but for my money, if you have several years before you will be accessing the money, then you should convert. Someone familiar with Wisconsin tax law will have to answer your tax question. Elizabeth Richardson |
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04-03-2004, 09:59 AM
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| Re: 401k rollover question Rich Carreiro <rlcarr[at]animato.arlington.ma.us> wrote in message news:<u4qsbn1ax.fsf[at]animato.arlington.ma.us> ... - quote - > "Andy" <noemail[at]noemail.com> writes: > > So in order to have a Roth IRA I would have to convert my 401k dollars to > > the Roth IRA which means pay taxes on the dollars that are Pre-Tax now. > If you want to put the rolled-over 401(k) (which by virtue of being > rolled over is now in a traditional IRA) into a Roth IRA, yes, that is > what you would have to do. > Or you could simply decide to leave the rolled-over money alone, open > up a Roth IRA account, and start making annual contributions to that. > As I said, it is a no-brainer to choose making annual Roth IRA > contributions over making annual non-deductible traditional IRA > contributions. > > Also, is there a penalty to convert? I know there is that 10% penalty for > > cashing it out before 59 1/2. > No penalty. The 10% early withdrawal penalty is waived when an IRA > withdrawal is done for the purpose of converting it to the Roth IRA. I recently left my previous employer. As I understand it, if I wanted to roll that 401K into a Roth IRA I'd need to pay the tax since those are pretax dollars. I worked in Wisconsin but we're moving to Florida, which has no state tax. If I wait until establishing residency in Florida before rolling over my 401K, will I still have to pay a state tax (Wisconsin)? Would it be wise to roll over the 401K into Roth in the first place? Thanks for the input. |
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