Ask Terry Questions 401k switched to a Roth ?

401k switched to a Roth ?

By Terry Savage on February 20, 2023 |

I have the opportunity to change my 401K to a Roth 40lk at my place of work.
I’m almost 60. Have $70 in my work 401K. My max pay will not go above $46,000 ever.
Should I convert my 401 to a Roth? Please advise.

Terry Says

Converting now means paying taxes now. And I don’t know where you would come up with that money.
At this stage of your life, I’m not sure that’s a great idea.
However, you could put all FUTURE contributions into the 40l(k) in the Roth option. You won’t get a tax deduction, but that portion of your money will grow tax free for retirement.
At your age now, you won’t have to start taking money out of your “traditional” portion until age 7%! (Yep, that’s in the new law!).
So you will have a “tax-balanced” portfolio — some taxable upon withdrawal and subject to then-current withdrawal rules, and the Roth portion will come out tax-free whenever you want to take it.

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