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Level 3

Open Roth 401K and Roth IRA after filing tax

I've e-filed my tax for 2018 with Turbotax and have recieved tax refund. After all the deductions my tax bracket is 12%. I'm currently having a traditional 401K but I think the Roth 401K might be better for me since I'm in a low tax bracket right now. So I'm considering opening a Roth 401K account and transfer all the balance(10K) from the traditional 401K to it. I also want to open a Roth IRA account soon. Here are some questions:

 

1. Without changing my job, is it allowed to transfer the balance from a traditional 401K to Roth IRA? If not, is it allowed to transfer the balance from a traditional 401K to Roth 401K?

 

2. My current tax bracket for 2018 is 12%. Does it mean I pay 12% tax rate when I transfer the balance of traditional 401K to Roth 401K? Or, will the transferred amount be added to my taxable income and increase the tax bracket? 

 

2. Since I've filed my tax for 2018, do I need to file amended tax return for opening Roth 401K/Roth IRA accounts and the balance transfer between traditional 401K and Roth accounts? Note: I will complete account opening and transfer before 04/15. 

1 Reply
Level 14

Open Roth 401K and Roth IRA after filing tax

1) it is allowed but if you I are under 59.5 years old there is a 10% penalty which increases to 25% if the money has been in the IRA for less than 2 years

2) added to your tax bracket so it could change the tax bracket plus there is the penalty from item 1