Does it make sense to convert my 401k & IRA to a Roth IRA while still working?

[@TravelingTheWorld1993]

I am currently contributing to a Roth 401K and I am doing an ( IPRR ) In plan Roth Rollover every year. Because currently I am in the 19% tax bracket. That 19% is for the state and federal combined.

[@rickb5275]

If taxes stay the same it doesn’t make sense to do a Roth conversion? It’s the growth of the money over time that gives most folks large tax bills not their contributions. 4 doubles = 35-40 years of growth…. 1. Double 200k you get 400k 2. Double 400k you get 800k 3. Double 800k you get 1.6m 4. Double 1.6m you get 3.2m I’d much rather convert 200k in Roth even if tax brackets decreased in the future rather than leave it in traditional. All that being said if I can afford to convert and pay the tax bill today. It’s almost always better to convert. I don’t understand how “experts” can’t understand the entire problem

[@delippman]

I also think it is important that traditional IRAs are considered income upon withdrawal. Thus, it is not JUST the tax bracket or the Widow's tax but also the fact that if one does not convert and has money withdrawn from a traditional IRA/traditional 401(k) or 403(b0 it could likely increase Medicare Premiums, Medicare Part D and increase the risk of Social Security being taxed. And you HAVE to take out some money whether you need it or not from the traditional and you don't have that issue with the ROTH. If you want to let it grow for your kids or other reasons, you have that option with a ROTH

[@cowdiewynn8427]

My husband tried to convert his 401K to a roth conversion but was told he could not do the conversion since he is actively working. He could do that once he retires. Confused about this after watching this video.

[@Quiltaholic10]

Sorry I still not clear- so let say I have 400 in 401k-how much if not all can be converted to Roth IRA? And how about future contribution-is that going into the new roth? Regardless tax bracket, if the balance keeps growing with each year and the us you may pay more tax later on?

[@edsteadham4085]

You can convert all of it but you must pay the tax on all that is converted. How much to convert in a given year and how to pay the taxes is the party that requires analysis. Converting too much is just as costly as not converting at all

[@dm-lombo1647]

What about tax free growth over a period of time?

[@stevekelly7488]

I have file as a single person even If my wife dies on 30 Dec?

[@edsteadham4085]

I believe you file as married so long as you are married one day during the year

[@jacobkowski7705]

This is totally wrong. Majority of people are much better with pretax accounts because when you convert them to Roth, you pay marginal tax rates (in this example, 22%) whereas, after retirement, you only look at effective tax rates, which will be only 12%. Even when tax rates go up, still your effective tax rates will be only 15%. And even when your spouse dies first, still your effective tax rates won’t be higher (SS income cut by a half). Watch other videos (like the one below ) to find why most of people are better off with pretax accounts. Even $3 millions in your pretax accounts are still not taxed more. Don’t convert them. You will regret badly after retirement. kzbin.info/www/bejne/g3mvq4COhMxqhs0si=6RqsftXdwytmX2Ls

[@josephj1234567]

correct me if im wrong, I believe it makes sense if you're farther away from retirement because rather than all of your money getting taxed during its compounding ( pre tax dollar contributions and gains), you would only have to pay taxes on current contributions and then moving forward, it compounds tax free.

[@europana7]

Convert after you retire at to fill up the first 2 marginal tiers of 10% and 12% (as of 2024), otherwise you are paying at the top marginal tax rate while still employed to do the conversion.

[@jacobkowski7705]

@@europana7that’s exactly what I am suggesting. If your marginal tax bracket is 22%, don’t convert!

[@jacobkowski7705]

@@josephj1234567that’s not correct. Mathematically if marginal tax rates are the same, pretax and Roth will have exactly the same balance when you withdraw 😊

[@mathew3267]

I could see tax rates going down with a Republican like Trump.

[@DelsMovers]

If you're a billionaire

[@mathew3267]

@@DelsMovers I made 80k and got a tax break so did you everybody did but I don't really know anything about politics.

[@edsteadham4085]

I guess you can't read the tax tables he presented that showed every bracket was lowered in 2017 and will revert to the higher brackets in 2026. Let me type slowly because as a liberal your math skills are limited. A 12 percent marginal tax rate is smaller than 15. The 22 and 24 percent brackets are less than 25 and 28. Do you get it now? No.

[@chewie1355]

Taxable income is the AGI amount?

[@miriamlara7688]

So this convention moves all untaxed money into a tax-free bucket and we pay those taxes during that tax year correct?

[@TM_Stone]

During the quarter a conversion was done or face a penalty.

[@rekhakapoor3451]

Can we convert partial traditional IRA to Roth IRA and leave some as traditional IRA?

[@5metoo]

Yes. You can do partial conversions of any amount as many times as you want to spread out the tax burden.

[@TomomiDeGroof-k4h]

Can we roll traditional 401K to Roth 401K?

[@sz7362]

It’s company based. Some companies allow to convert directly from Traditional 401K to Roth 401K but some companies don’t allow to do it. It is easier to call company to verify it. It happened to me as my company doesn’t allow but my husband company can do it.