Have any of you rolled over your 401k into Roth Ira? Whats the process and how much I have to shell out to unclesam ? Any mega backdoor ?
You can’t roll it over to a Roth IRA. You want what’s called a rollover ira. I moved 50k of 401k money into one from a rollover by BofA Merrill Lynch. Money from this account also adds to preferred rewards member status where you get more credit card points and free trades each month.
And the cost of doing this is $0.00
You sure of that? I read somewhere it is possible thats why I posted here to get it straight from horse mouth
So if it's normal 401k you can rollover to rollover IRA which is essentially a normal IRA. If you then want to rollover to Roth IRA, you'll be charged taxes for that amount as if it were income. 2nd option if you have Roth 401k funds you can roll them over directly to Roth IRA for free
This is the right answer
You’re talking about a mega backdoor Roth IRA. You can only do it with post tax 401k, not pre tax. You’ll have to pay taxes on any gains the post tax 401k made when converting it. The specific process varies depending on who your 401k is with.
It is common sense that you can't roll over without cost implications because 401k is tax deferred while Roth is post tax. It may add on to your gross income and taxed at your highest tax bracket. Do a search and educate us. lol.
There is Roth 401k which is post taxed.. The above guys are talkin about that. I am just wondering if it is possible to roll over pre taxed 401k to Roth IRA..using some shady technique
Normal 401k, and earnings on "after tax 401k" contributions both get rolled into normal IRA and you'll have to pay tax to convert to Roth IRA. Roth 401k and "after tax 401k" contributions roll directly to Roth IRA without additional cost or taxes. After tax contributions differ from Roth contributions because Roth earnings are also Roth but you're limited to 19k contributions, whereas after tax you can contribute up to 56k but earnings on those contributions are considered pre tax.
This.. so you can contribute upto 56k on Roth 401k, post taxed ? BTW, very basic question, if Roth 401k is same as say vesting directly on market using MF / ETF etc.. How only roth gives Compounding ? I mean why is that 56k roth behaves diff than going directly to market using brokerage account? ( I mean I know roth gives componding is diff but ho1w do they manage )
No so let's say you put in 56k all post tax for the year and you have no employer match. The first 19k will be Roth 401k, the other 37k is considered "after tax 401k contribution". So the 56k + the earnings on the 19k will all rollover to Roth IRA with no cost, however the earnings on the 37k will not and you'll have to pay to convert those
What is the benefit?
Tax free compounding