Rolling over a 401K

[Rosehip]

I want to roll over a 401K from a previous job. I would like to put in a Roth. I qualify, and my tax rate will definitely go up (I graduated from a career-change program in May, and will only work July-December this year) next year. The only thing is, I'm not sure I'll have the money to pay all the taxes I'd owe if I rolled it over to a Roth.

Does anyone know if when rolling over a 401K, can I opt to put it into two accounts? So put half into a Roth, and half into a regular IRA? Then next year I might be able to transfer the rest from the regular to the Roth.

[velochic]

You can't roll a 401(K) directly into a Roth. You have to put it into a traditional IRA first then transfer to a Roth.

[littlehoneybee]

I just rolled over my 401K directly into a Roth. I was told that if you do it this year, you can split up the tax payment over the next two years.

[A&A]

This isn't what you asked for, but I'd cash it and not look back. The market is poised to tank.

(at www.nytimes.com , search for "Robert Prechter")

[velochic]

Originally Posted by littlehoneybee

I just rolled over my 401K directly into a Roth. I was told that if you do it this year, you can split up the tax payment over the next two years.

1. You have to already have a Roth account to do this.

2. The tax payments can be spread over 3 years, not 2.

[littlehoneybee]

velochic Quote:
Originally Posted by littlehoneybee
I just rolled over my 401K directly into a Roth. I was told that if you do it this year, you can split up the tax payment over the next two years.

1. You have to already have a Roth account to do this.

2. The tax payments can be spread over 3 years, not 2.

1. I did not already have a Roth. I intended to roll the money into a regular IRA and then convert it to a Roth, but my financial institution told me that they could convert it immediately essentially making it a direct rollover.

2. I was told two, but I would have the OP call her financial institution to double check.

[velochic]

Originally Posted by littlehoneybee

1. I did not already have a Roth. I intended to roll the money into a regular IRA and then convert it to a Roth, but my financial institution told me that they could convert it immediately essentially making it a direct rollover.

Right... it's a two-step process and someone else did it for you, so you didn't have to deal with the paperwork or see it as the two steps. For the record, though, that Traditional IRA can be helpful for people if there are large tax implications. You can sit your money in the Trad IRA and slowly convert to Roth over years so you're not hit at once with the tax liability incurred when going to Roth.