Ask Terry Questions Retirement Account

Retirement Account

By Terry Savage on July 28, 2024 | Financial Planning / Retirement

Hi Terry,
I have $30K in a traditional 401K from a previous employer that I haven’t touched since I left the job 5 years ago. Now I am a union carpenter. Work has been slow so 2024 income is low. Should I roll my 401K into a Roth IRA (I do not have one yet) while income is low so taxes owed on the conversion will be low? Or should I roll it over into my union defined contribution retirement plan?

Terry Says

Given your description, this would be a great time to do an IRA Rollver into a Roth.  But don’t take the money.  Read this:  Rollover Now – Terry Savage

But this only works if you have the tax money OUTSIDE the IRA to pay the taxes.  Otherwise, you will pay a 10% penalty (if under age 59-1/2) and get taxed on the money you might take out to pay the taxes.   If you can’t do that, then just leave it as a traditional rollover.

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