Ask Terry Questions 401k to Roth conversation

401k to Roth conversation

By Terry Savage on May 04, 2022 | Financial Planning / Retirement

Hi Terry!

I’m getting ready to leave my job and head to law school. I have about $50k in a 401k account and I’m wondering what to do with it? I am leaving work mid year, before returning to school full-time in August.

I’m wondering if I waited until 2023 to convert the 401k into a Roth, that would lessen my tax burden because I’d have very little income for that calendar year because of school? I can’t wholly predict the future, but I do think I will be in a higher tax bracket after school.

Or is it best to just leave the 401k alone and combine it with whatever employer plan I have after graduation?

Thanks!

David

Terry Says

Definitely roll it over. But you may have to do it in two steps. First convert it to a Rollover IRA. YOu can do that this year after you leave your job. Fidelity or Vanguard will handle that. Then next year, with no or low income, do the conversion to a Roth.

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