Hi!
I converted my traditional 401k to roth 401k this winter thinking it makes more sense to have roth at my current point in career rather than lots of traditional money. I unfortunately had already put in roth IRA money for the year and would now be over the contribution limit if the conversion counted towards the roth IRA limit MAGI. I had looked at many articles and asked around but haven't found a good consensus about this. The best I can gather so far is a conversion in plan doesn't add to MAGI for roth IRA limit, but if it was a rollover it would? Is that correct? Thank you so much in advance!
Best,
Jenn
Only conversions to a Roth IRA are excludible from MAGI for the purpose of determining Roth IRA contribution limits. In-plan Roth Rollovers are not excludible from this MAGI. (As the terms are defined in the tax code, an In-plan Roth Rollover is not a Roth conversion.)
To eliminate the excess contribution for 2025, you'll either need to obtain an explicit return of the excess Roth IRA contribution or you'll need to request that the Roth IRA custodian recharacterize the excess to be a traditional IRA contribution instead.
Only conversions to a Roth IRA are excludible from MAGI for the purpose of determining Roth IRA contribution limits. In-plan Roth Rollovers are not excludible from this MAGI. (As the terms are defined in the tax code, an In-plan Roth Rollover is not a Roth conversion.)
To eliminate the excess contribution for 2025, you'll either need to obtain an explicit return of the excess Roth IRA contribution or you'll need to request that the Roth IRA custodian recharacterize the excess to be a traditional IRA contribution instead.