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Should You Convert Your 401k to a ROTH IRA?

Should you convert your IRA or 401k to a Roth IRA? 

 

You may have a traditional IRA or 401k that allows you to make tax-free contributions, but you will have to pay taxes on that money when you make withdrawals in retirement.  You could avoid paying potentially high tax rates on your money by converting some, or all your traditional IRA or 401k into a Roth IRA. A Roth IRA does not allow tax-free contributions, however, the good news is that you do not have to pay any taxes when you withdraw your money in retirement.  You could be saving tens of thousands of dollars in retirement just by making this conversion. Your money can continue to grow…TAX FREE. 

There are several things to note when you are looking into converting an IRA or employer plan (401k) to a Roth IRA.  All funds in traditional IRAs, SEP IRAs, and employer plans such as 401(k)s are eligible to be converted to a Roth IRA.  Funds in a SIMPLE IRA can also be converted AFTER the SIMPLE account has been open for two years. A conversion before that date will be subject to a 25% penalty tax on the amount withdrawn AND the funds would not be eligible for transfer to any other type of plan except another SIMPLE.  To do a conversion of employer plan funds, you must be eligible to take a distribution from the plan.

Call for a visit with us if you would like to chat about converting your IRA or 401k to a Roth IRA. Saving money in an IRA or 401K is a great start.  If you have questions about your IRA, 401K, SEP, pension or other retirement accounts, we’re always here to help!

Call us:  Gregory Ricks & Associates

504-832-9200

Investment advisory services offered only by duly registered individuals through AE Wealth Management, LLC (AEWM). AEWM, Gregory Rick & Associates, WJ Blanchard Law, LLC., J Heath & Co. and Mortgage Gumbo are not affiliated companies. Neither the firm nor its agents or representatives may give tax advice. Gregory Ricks & Associates has a strategic partnership with tax professionals who can provide tax advice. Investing involves risk, including the potential loss of principal. 00310623


Sources:

https://www.investopedia.com/articles/retirement/08/convert-401k-roth.asp

https://www.irs.gov/retirement-plans/simple-ira-withdrawal-and-transfer-rules

 

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