Roth Conversion
Hi Terry,
We are starting to evaluate our options for converting a 401k to Roth IRA. I know how the math works for paying less tax now vs more tax (maybe?) later. I’m wondering is it always the best route to convert 401k to Roth instead of letting the pretax 401k keep growing? My thought process is that the tax savings (?) with a Roth will be spread out over multiple years while we take out money as needed during retirement and may not make that much difference at the end of the day.
Thanks and love your WGN discussions.
Terry Says
This is a tough one, because it depends on your other income, your spending plans, your guestimate of future tax rates, and inflation. But it doesn’t have to be an “all or nothing” decision. YOu can convert a portion of your assets to a Roth and keep the other in a traditional.
However, you don’t say whether you are still working for the company. If you are still employed, you cannot roll out of your 40l(k) and into an IRA! But if you are no longer with the company, you could roll a portion to a traditional Rollover IRA and some to a Roth. Check with your plan custodian.
