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Visitor III

Traditional 401-K to Roth IRA conversion



I recently changed jobs and because I am still early in my career, I would like to rollover my traditional 401-K to an existing Roth IRA. I understand the tax consequences of the conversion and I expect to pay the taxes come tax season. I don't think it will put me in a higher tax bracket.. but I would like to know if I can take a withdrawal out of my Roth IRA next year to pay these taxes, since withdrawals on contributions are penalty-free.

Does the money I convert from the traditional 401-K count as as "contribution" to my Roth IRA? If so, would that mean that I would not get hit with any penalties if I withdraw from my Roth IRA next tax season (as long as I am not touching the earnings)?


E.g. If I rollover $40,000 from my traditional 401-K to a Roth IRA now, and my Roth balance during tax season is $40,000 + earnings, can I withdraw some of my contributions to pay off the taxes from the rollover?

Any advice would be greatly appreciated!

Catalyst V

Traditional 401-K to Roth IRA conversion

Can't speak for state laws. But on the federal side if you take a distribution from a ROTH within 5 years of establishing it, there will be a 10% penalty at a minimum.

Visitor III

Traditional 401-K to Roth IRA conversion

You can do what you want to do but:
Taking out RIRA dollars to pay for a T401K conversion to RIRA is working cross-purposes.
Instead: Rollover T401K to  TIRA.  Let it sit until you have post-tax dollars to rollover to RIRA.
Presumably in retirement you think you will have enough SS/pension/T401K/TIRA income to fill up the lower tax brackets that moving to a RIRA at this juncture makes sense (i.e., don't convert all your assets to Roth).

Is $ converted from T401K1-K counted as a "contribution" to RIRA?  No.


All IMHO....GMcK