A
Anon1
Guest
Im a full time driver and would love to be able to transfer my money to a Roth IRA. I know all the steps involved but Im curious as to if anybody has actually done it before?
401k--to--Rollover IRA
Rollover IRA--to--Rollover Roth IRA (paying taxes in the meantime)
Paul,
No one has addressed why rolling the whole thing over (if possible) is a bad idea. It is the taxes you have to pay--not talking about any penalty. Here is a chart for 2007:
Filing Status and Income Tax Rates 2007
Tax rate Married filing jointly
or Qualified Widow(er) Single Head of household Married filing separately
10% $0 - 15,650 $0 - 7,825 $0 - $11,200 $0 - 7,825
15% $15,651- 63,700 $7,826- 31,850 $11,201- 42,650 $7,826- 31,850
25% $63,701- 128,500 $31,851- 77,100 $42,651- 110,100 $31,851- 64,250
28% $128,501- 195,850 $77,101- 160,850 $110,101- 178,350 $64,251- 97,925
33% $195,851- 349,700 $160,851- 349,700 $178,351- 349,700 $97,926- 174,850
35% over $349,700 over $349,700 over $349,700 over $174,850
See the tax rates on the left. You could easily go from the 25%-28% to the 33%-35% bracket. Not only that, but you would have to pay state taxes on this money also and can you say alternative minimum tax? You could easily wipe out 40% of your savings depending on your circumstances. Better to do it any deferred plan a little at a time to avoid hitting the next tax bracket. Just my two cents.