IRA Question/ Any Tax Guys here?

[coatrack Member Find all posts View Profile Close coatrack]

I have a simple question about whether to roll over my 401K to a traditional IRA or a ROTH....need the tax writeoff....my broker tells me I need to ask a tax person as it would depend on my income and whether it would could be a write off...I'm lost.....

I don't have a tax person as our taxes are done on TurboTax....anyone out there I can shoot a PM to for general help?

[CaliDave Super Moderator Find all posts View Profile Close CaliDave]

I'll give you a quick response of what I know..
To even qualify for a Roth, your combined income has to be under a certain level.. its around $120K or so.

If you roll your 401K into a Roth, you will have to pay imcome tax on the entire amount you roll over. So lets say you rollover $50K, you will pay tax on that $50K next. The good thing is.. if you are young.. you'll never pay taxes on any earning from that account. So if you cash out 30 years form now with 1.5 million.. its all tax free.

If you are anywhere close to retirement, I'd roll it into a traditional Ira.
The traditional IRA will have no immediate tax consequences. It will basically be the same as if you kept it in the 401K. You will pay taxes on that full amount when you retire and start withdrawing the $$.

I have a Roth Ira and I'm funding it to the max, however I am young and I hope to be over the threshold soon, then I'll have to switch to a traditional IRA, without the income limits.

[coatrack Member Find all posts View Profile Close coatrack]

thanks for the info.....I sen tyou a PM with one more question.