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

By Denise Appleby AAA
A:



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)



RELATED FAQS

  1. How does a defined benefit pension plan differ from a defined contribution plan?

    Learn the differences between defined benefit plans and defined contribution plans when reviewing employer-sponsored qualified ...
  2. What are the best ways to pay off my mortgage quickly?

    Learn how mortgage payments may be reduced and how to save thousands on mortgage loans by lowering the interest and principle ...
  3. What are the advantages of an index fund over an ETF?

    Diversifying a portfolio is one of pillars of investing basics, and an index fund can provide an investor with exposure to ...
  4. How do deferred tax assets help in meeting retirement goals?

    Learn how tax deferred assets can help individuals achieve long-term financial goals such as retirement and how they differ ...
RELATED TERMS
  1. Self Invested Personal Pension (SIPP)

    A tax-efficient retirement savings account available in Great ...
  2. Senior Move Manager

    Senior move managers (SMMs) help seniors downsize and relocate ...
  3. Elder Care

    Elder care, sometimes called elderly care, refers to services ...
  4. Gold IRA

    Definition of Gold IRA
  5. Eligible Transfer

    An IRS-allowed movement of assets into or out of an individual ...
  6. Death Master File (DMF)

    Also known as Social Security Death Index. A list of people whose ...

You May Also Like

Related Articles
  1. Professionals

    Who Wants to be a 401(k) Millionaire?

  2. Professionals

    Are Longevity Annuities in 401(k)s a ...

  3. Mutual Funds & ETFs

    Greedy on the Dollar? See This Leveraged ...

  4. Trading Strategies

    American Express: Headwinds and Tailwinds

  5. Professionals

    Why Retirement Advice Is Better But ...

Trading Center