401k and Roth IRAs

[jakeyt]

I cannot roll over until I leave the company, correct? What if I open a Traditional IRA account?

 

[mkarim]



I cannot roll over until I leave the company, correct? What if I open a Traditional IRA account?

Same rules apply, except that you won't be taxed when you roll over 401K funds into it. You'll be taxed whenever you withdraw from it.

 

[jakeyt]

Traditional IRAs still have a $5,500 limit right? Yes. I checked on the IRS page.

 

[norcaltransplant]

Btw, the deadline for 2013 contributions is also April 13th. For those who are converting to a backdoor IRA, remember to keep a safe record of your 8606 forms.

 

[otc]

What's the process for switching from a roth to a traditional IRA if your AGI is too high (even after 401k/other deductible expenses) to qualify for the Roth? Can you just re-characterize the deposits from that year, or are there penalties/complications?

 

[jakeyt]



Btw, the deadline for 2013 contributions is also April 13th. For those who are converting to a backdoor IRA, remember to keep a safe record of your 8606 forms.

This is just to fund the account right? I don't have to make any investments by April 13?

 

[norcaltransplant]



This is just to fund the account right? I don't have to make any investments by April 13?

You just have to fund the account before the 15th. I haven't actually completed by Roth conversion from last year, which is really bad since the S&P appreciated 25% and the funds were sitting in a money market type fund.

What's the process for switching from a roth to a traditional IRA if your AGI is too high (even after 401k/other deductible expenses) to qualify for the Roth? Can you just re-characterize the deposits from that year, or are there penalties/complications?

Are you trying to fund a Backdoor IRA? I use Vanguard, so I can't vouch for other brokerages, but you just use your existing account to fund a "new" Roth IRA. It's an all or nothing maneuver, so if you have existing funds with a tax deferred basis, they will count as income during your conversion year. I believe this was the original intent of the government to generate short term tax gains in 2010. If you have more questions about backdoor IRAs and how they apply to your current financial situation, I would recommend posting on the Bogleheads forum. The posters are extremely knowledgeable, though conservative in their financial planning and investing strategies.

 

[gettoasty]

Why would someone contribute into a non-deductible IRA? Why not just contribute into a Roth?

 

[Ketawa]

There are income limits for Roth IRAs and deductible Traditional IRAs, but no limits for non-deductible Traditional IRAs. And there are no limits on converting a non-deductible Traditional IRA to a Roth IRA.

http://www.bogleheads.org/wiki/Backdoor_Roth_IRA