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. What are some examples of common fringe benefits?

    Learn how offering fringe benefits can be a strategic recruitment and retention tool for employers and drastically increase ...
  2. Is it a good idea to add a reverse mortgage to your retirement strategy?

    A reverse mortgage can be a great way to increase retirement income. Does it work for everyone? What happens after a homeowner ...
  3. What are the keys to setting up a trust fund?

    Setting up a trust to secure your assets for a beneficiary allows you to set the terms under which the beneficiaries are ...
  4. What does amortization mean in the context of a pension plan?

    Discover when and why accountants use amortization techniques in the context of pension plans, and why those changes help ...
RELATED TERMS
  1. Senior Move Manager

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

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

    Definition of Gold IRA
  4. Eligible Transfer

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

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

    The use – by a business owner or professional practitioner – ...

You May Also Like

Related Articles
  1. Professionals

    Retirement Bliss? Not So fast: When ...

  2. Professionals

    Multiple Accounts? Here's How to Calculate ...

  3. Professionals

    Tips for The Reality of a Working Retirement

  4. Professionals

    CITs in 401(k)s: What You Need to Know

  5. Trading Strategies

    American Express: Headwinds and Tailwinds

Trading Center