Retirement Account
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.