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However, the passage in late 2022 of the SECURE Act 2.0 now allows matching funds to be held in a Roth 401(k), meaning you can avoid taxes on a conversion (because you pay taxes when the money ...
A Roth conversion ladder can be a smart strategy that allows you to move funds gradually from one account (traditional IRA) to another (Roth IRA) without triggering any tax penalties. This ...
You can also withdraw the money you put into a Roth IRA at any time without a penalty, though if you take out the earnings before age 59 ½, you’ll owe income taxes and a 10 percent IRS penalty ...
Roth conversions come at a cost, however, because the converted amounts will be treated like ordinary income on your current tax return. Converting a large 401(k) can, therefore, lead to a sizable ...
When you make a Roth conversion, the value of any assets that you convert are added to your tax bill for that year. So, for example, say you have $2 million in a 401(k) and convert the entire amount.
When you convert money from a pre-tax account, such as a 401(k) or an IRA, to a post-tax Roth IRA, you must pay income taxes on the full value of the transfer. The advantage to converting to a ...
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