I just retired and have 80,000 in my 401k. If I roll it over to a Roth IRA, Do I pay taxes on it at that time?

I just retired and have 80,000 in my 401k. If I roll it over to a Roth IRA, Do I pay taxes on it at that time? Asked by punch 14 months ago Similar questions: retired 80 000 401k roll Roth IRA pay taxes time Business > Taxes.

Similar questions: retired 80 000 401k roll Roth IRA pay taxes time.

Yes, you pay taxes on it at the start, the point of a Roth account is that the taxes are paid when the contribution is made. Com/how-to-rollover-your-401k-into-a-roth-ira.

Wealthadvisor is the pro, not me, so be sure to read carefully what he says.

I assume you are either retired or no longer working for the company that has your 401k. Otherwise, you can not roll your 401k into a Roth IRA. But, you do not pay the tax at that time.

You can defer the tax for 2010 and then divide the tax over 2011 and 2012. This means you only owe tax on $40,000 in 2011 and then tax on the remainder in 2012. Here are reasons to roll to a Roth IRA rather than a regular IRA.1.

You are in a lower tax bracket now and will be in a higher tax bracket later. You need to look at pension, investment, interest, Required Minimum Distributions at age 70 1/2, Social Security, and any other income you may have when retired. If you can roll it now and pay less tax then the tax you will owe when making withdrawals later, it pay to roll now.2.

You have other retirement dollars and feel the $80,000 is the money you would use last. You pay the tax over the next three years and then let the money sit. There is no Required Minimum distribution requirements from a Roth IRA.

You could let the money sit there as long as you want.3. You would like to leave the 401k dollars to wife or children. Once converted to a Roth IRA you can leave the money to anyone you want and they will owe no income tax on the money.

Here is the main reason not to roll the 401k to an Roth IRA. You are in a higher tax bracket now and will be in a lower one later. It makes no sense to pay more tax now than later.

There are some unknowns. We don't know what tax brackets will be in the future. Most likely they will not be lower.

They could be the same, but most likely higher. We also have no idea if the government will change the Required Minimum Distribution. There are billions of dollars in untaxed revenue in IRA's and 401's.

If the government feel they need more revenue, they can require you to take more, and thus pay more tax. But, none of this applies to a Roth IRA. Here are the conversion rules for a 401k to a Roth IRA,http://www.goodfinancialcents.com/2010-roth-ira-conversion-rules/ com/2010-roth-ira-conversion-rules.

If you convert your IRA to a Roth - you will add the $80,000 to your AGI (adjusted gross income) and be taxed on the total. So you will likely pay around $24,000 in additional taxes. (I am assuming you will be in a 30% marginal tax bracket.

If it is less, the taxes will be less). The main reason to convert from an IRA to a Roth is because you have enough TIME to make up for the loss in capital - or you have other money you can spend to convert the IRA. Otherwise, you are reducing your income by some factor - I (interest) time $24,000.So if you can earn 5% in your IRA - you would have an additional $100 of income by not converting.

If you convert, your remaining $80,000 will be only worth $56,000 and @ the same 5% earning $2800 a year compared to $4000 a year. I cannot think of any reason you should convert right now - UNLESS you can leave it alone for 5-10 years and earn back the tax. Hope this helps.

Don't do it. Just take your money from your IRA as you need it) and following the IRS disbursement schedule). As guybee said, you will trigger a heck of a lot of taxes you'll have to pay.

" "I took a withdrawal from my Roth IRA to pay off debt, I have a 401k to move so can I put it into the Roth IRA avoid tax" "I just retired, and have a 401k. Thinking about going to an IRA. Can I take any money out prior to the transfer.

" "I am 61 retire at 65 in 25% tax bracket probably 15% retirement. Shd I roll 401Kto Roth IRA pay taxes now?" "How do you do your taxes? " "Do you have to claim a Roth IRA on your yearly taxes?

" "I am self-employed, never had to pay taxes before, do I have to pay state taxes?" "Is it possible to rollover my 401k with a loan to an IRA to avoid taxes and penalties?

I took a withdrawal from my Roth IRA to pay off debt, I have a 401k to move so can I put it into the Roth IRA avoid tax.

I just retired, and have a 401k. Thinking about going to an IRA. Can I take any money out prior to the transfer.

I am 61 retire at 65 in 25% tax bracket probably 15% retirement. Shd I roll 401Kto Roth IRA pay taxes now?

Don't do it. Just take your money from your IRA as you need it) and following the IRS disbursement schedule). As guybee said, you will trigger a heck of a lot of taxes you'll have to pay.

DanZee 62 months ago.

Don't do it. Just take your money from your IRA as you need it) and following the IRS disbursement schedule). As guybee said, you will trigger a heck of a lot of taxes you'll have to pay.

DanZee 64 months ago.

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