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If I want to roll over my 401-K to IRA account, should I roll over to my regular IRA account then to my backdoor Roth IRA?

 
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3 Replies

If I want to roll over my 401-K to IRA account, should I roll over to my regular IRA account then to my backdoor Roth IRA?

when you say "rollover my 401K to IRA account" is the goal to convert it all to Roth?

 

generally you can rollover the 401K to IRA without any tax; conversion from the IRA to Roth is then taxable.

 

what is the make-up of your 401 is it entirely pre-tax contributions/earnings, or do you have after-tax contributions, or any sort of Roth 401k balance etc?  If you have after-tax contributions in the 401K some plans/custodians allow that balance to be rolled over to Roth.

 

but if you are using your IRA for backdoor Roth conversions which relies on having zero balance/basis in the IRA to make the backdoor Roth conversion non-taxable, if you convert your 401K to IRA and then don't convert it to Roth and have a balance in the IRA then you won't get the same tax advantage on backdoor Roth conversions.

 

if you can explain a bit more about your situation and what you are looking to accomplish that may help 

If I want to roll over my 401-K to IRA account, should I roll over to my regular IRA account then to my backdoor Roth IRA?

A backdoor Roth IRA is not an account, it is a process.  You make a non-deductible contribution to a traditional IRA, then convert it to a Roth IRA.

 

This process does not work if you have any pre-tax money in any traditional IRA, because all IRA accounts are grouped together for the tax and rollover rules.  

 

If you currently have no pre-tax money in a traditional IRA, and you rollover your pre-tax 401k into a traditional IRA, you will not be able to do any more backdoor Roth IRA conversions unless you convert all your pre-tax IRA to a Roth IRA and pay the required income tax. 

If I want to roll over my 401-K to IRA account, should I roll over to my regular IRA account then to my backdoor Roth IRA?

Generally, a Rollover of 401k or similar plan to Traditional IRA severely compromises the tax-free aspect of Backdoor Roth contributions.

@dr-barahas 

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