I have a client who retired this year, rolled over his 401(k) to a traditional IRA. Next year he wants to roll it over to a Roth IRA. He was told that he should transfer the funds back into the 401(k) (he has until Nov 30 to do this) and wait until next year and roll it to the Roth IRA because of some sort of tax benefit. I have searched some of the forums but don't see any thing that would explain any tax benefit. Maybe some of you out there can help me?
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Roll of 401(k) to ROTH
You can now transfer 401(k) directly to the Roth. Prior to 2008 you had to roll over to a traditional IRA and then convert to Roth. Of course you still must pay tax on the conversion (except for any amounts attributable to after tax contributions). Beginning in 2010, anyone can convert a traditional IRA or 401(k) to a Roth - regardless of income. Currently, taxpayers with AGI of more than $100,000 are not eligible for a conversion. For conversions in 2010, you can choose to spread the resulting taxable income over two years, with half in 2011 and the remaining amount in 2012. This tax break was enacted way back in 2006 with the passage of the Tax Increase Prevention and Reconciliation Act. Keep an open-eye for the Tax Book for 2009 to see if this is still current. -
Loan from Roth 401(k)
I can't find anything on this so I hope someone can help me. Can you take a loan from your Roth 401(k) just as you can from a non-Roth 401(k)? Thanks much.Comment
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You can't, but...
...but there are some workarounds. See, for example, this link:
Evan Appelman, EAComment
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Link to article doesn't address Roth 401(k). I'm interested in whether you can borrow from a Roth 401(k) as you can from a non-Roth 401(k).Comment
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