Users' questions

What is an in-plan Roth conversion?

What is an in-plan Roth conversion?

• A Roth in-plan conversion involves taking an available, rollover-eligible distribution from your 401(k) plan and directly rolling it over to a Roth account within the same plan. Examples of eligible assets may include your own contributions, contributions from your employer or assets rolled in from a former employer.

Can you convert prior year to Roth?

There is no prior-year provision. You can not convert now but count it as last year. For this reason, those engaged in systematic Roth conversions need to take effort to project what their taxes might be before the year is done. We do this for our clients as a part of our Tax Review and Roth conversion services.

Are in-plan Roth conversions a protected benefit?

The ability to make an in-plan Roth rollover is not itself a protected benefit.

How do I calculate my Roth conversion basis?

Calculating a Roth basis is simple. Add up all of the contributions you have made to date and subtract any contributed funds you have withdrawn in the past.

Who might benefit from a Roth in-plan conversion?

Tax-free withdrawals could be a significant benefit, especially if you expect to be in the same or a higher income tax bracket at the time of withdrawal than you are at the time of the conversion to Roth. That said, a Roth conversion is not for everyone. Q: Who might benefit from a Roth in-plan conversion?

How to consider a mega backdoor Roth conversion?

If you are considering a mega-backdoor Roth conversion it is important to view this in the context of your overall financial strategy. Analyze all your employee benefits including HSAs, stock options, and nonqualified deferred compensation with tax projections for how they all work together.

When did small business convert assets to Roth?

The Small Business Jobs and Credit Act, which was signed into law September 27, 2010, permits plan sponsors to allow certain eligible plan participants to convert assets to Roth within their plan for the first time.

Can you convert a traditional account to a Roth account?

Recent legislation now permits plans to adopt a newly expanded Roth in-plan conversion feature. This new plan feature allows you to convert all or a portion of your pre-tax and traditional after-tax money to a Roth account within the plan. Q: Who is eligible to make a Roth in-plan conversion?