Frequently Asked Question

December 20 2006 | Filed Under ยป ,

I am rolling my 401(k) into an IRA. After a year, can I convert this amount to a Roth IRA tax free?

There is no provision in the tax law that would allow anyone to convert taxable funds and treat it as a tax-free transaction, regardless of how long the assets have been rolled to the Traditional IRA. Of course, conversions of nontaxable amounts are not taxable.
A Roth conversion can always be reversed through recharacterization, thereby making the conversion null and void, but all that can be avoided by ensuring that the individual is aware of the tax implications of the conversion.

For more insight, see Did Your Roth IRA Conversion Pass Or Fail?

This question was answered by Denise Appleby
(Contact Denise)
by

Denise Appleby

Denise Appleby
Denise Appleby is founder and owner of Appleby Retirement Consulting,which provides technical consultation, content, coaching, writing, editing and training services on related topics.


With more than 14 years of experience in the IRA and defined-contribution plans fields, Appleby has held several senior retirement-plan related positions with Pershing LLC, which included vice president of plans products and services, retirement plans manager, trainer, training manager, compliance consultant, technical help desk manager and writer.
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