Rollover to Roth IRA question

lbonga1 · December 2015

A while ago I asked whether I should rollover my 401k with my old company into an IRA. The company recently switched from Schwab to Empower Retirement, and I don't think they have very good investment options, so I've decided to take the plunge for the rollover. I opened a traditional IRA with Vanguard, but I haven't yet contacted Empower to transfer my account balance. What I'm wondering now is if I should convert it to a Roth IRA instead. I was unemployed for a portion of this year, so I know I will be in the lowest tax bracket. Because of that, I know it would make sense to convert it to a Roth. On the other hand, I don't want to be hit with a huge tax bill that I'm not prepared for. Can I wait until I receive my W-2/1099's to estimate how much my refund might cover the taxes from the conversion, then still file the conversion as part of my 2015 taxes? I know you have until a certain date to make contributions and still have it count for the previous year, but I don't know if the conversion counts as well.

hoffse · December 2015

I think you have to do conversions by year-end, but I'm not positive about that. I would call Vanguard and ask them, because they will be able to tell you for sure.

H and I now have to do a conversion from a regular IRA to a Roth IRA each year, and I know those have to be done by year-end, but I'm not positive about a 401(k) to a Roth IRA.

Could you get a copy of your last pay stub and do an estimate of your 2015 taxes before year-end?

lbonga1 · December 2015

@hoffse Unfortunately I can't get a copy of it fast enough. If I try to log into their "portal" it says I'm inactive, and the HR department probably wouldn't be able to mail it to me in time. I can estimate how much I made based on my yearly income, but I don't know how to estimate how much was taken out in taxes.

smerka · December 2015

I am pretty sure you can't. But you could convert a portion of it instead of the whole thing.

lbonga1 · January 2016

@smerka I ended up converting the whole thing to a Roth. An Empower rep talked me through the options when I contacted them to transfer my balance to Vanguard. He told me I would have to complete the transaction over the phone by 4 pm EST today in order for it to count for this year's taxes, so I went ahead with it while I was still on the phone with him yesterday.

Rollover to Roth IRA question

Re: Rollover to Roth IRA question

Choose Another Board

Search Boards