⚠ 401k to Roth Roll Warning | FinTips 🤑

[@kristin89]

My husband rolled his 401k to a Roth IRA. It’s going to suck paying the tax bill but we are already in a higher bracket and wanted to get it done sooner than later. The good news is that the money will now grow tax free for another 25-30 years which saves us in taxes in the long term I think.

[@mscolli3]

Also when going into a Rollover IRA -> Roth IRA, look into doing a conversion ladder to minimize or avoid taxes. (Only convert a few thousand a year, so your annual tax bracket is the lowest it can be.)

[@Stashmo]

It depends.

[@lain11644]

Waiting 5 years is still way better than waiting until 59.5 yo.

[@airlebron7467]

Yup

[@ricardomorales3096]

Totally

[@starofgideon]

True.

[@juliennelintag]

Thanks for the clarification. I had that same question in my head before watching your video. Good thing yours is the first one I clicked! Got my answer right away! :))

[@MikelWellington]

I literally was trying to figure this out this past weekend. I haven’t signed up for any classes or anything anywhere. I’ve just been trying to learn as much as possible on my own with low overhead and this is the exact question i was looking to get answered. thanks!

[@natashamdiaz]

Thanks for this! After watching your videos I knew I wanted to open a Roth IRA. I had this same idea with my 401k from a previous job. When I looked up the info I found that I had to wait 5 years, I'm young so I dont need the money now anyway, but it was still confusing to me. Its easier to understand when you explain it.

[@BrianVelez]

So just to clarify, if I roll over my 401k to a Roth IRA I will be able to touch it penalty free after 5 years? 🤔

[@ricardomorales3096]

That was my same question-thank for asking.

[@pauls3147]

But I guess u have to pay tax when u put it in the Roth.

[@mattmathai]

You can withdraw contributions immediately. You can withdraw gains without penalty after 5 years

[@TheGregWallace]

Unless you already have had your roth that you are rolling it into for 5 years. That is why it is a good idea to have a regular roth outside of your 401k roth.

[@bigtoeknee11]

First step would be to roll it into a rollover IRA then do Roth conversions, 5 yr wait period on converted money and be at least 59.5 yo to avoid any penalties. You will owe tax on converted money so pay attention to your tax brackets.

[@m.m.m.c.a.k.e]

Tax man coming for us! Thanks bruh

[@donghao5770]

How about rollover from Roth 401k to Roth IRA? Do we need to wait for 5 years to take out the principal without penalty?

[@thebestthingthatneverhappe6729]

I believe so

[@rubyus7332]

Yes.

[@lvclt500]

No you do not. As long as the ROTH IRA has already been opened for at least 5 years.

[@remy9536]

So if one decide to go 401K-->IRA-->Roth as stated, does the person still wait 5 year?

[@hiupanddown]

Yes and you pay taxes when you take it out the Roth

[@CristinaLopez-mv2ix]

@@hiupanddown when you take it out of the Roth you don't pay taxes.

[@bigtoeknee11]

@@hiupanddown taxes are paid when you convert from rollover ira to Roth IRA. Roth IRA growth will be tax free as well as any distributions (assuming you meet age requirements and wait 5 years)

[@faithfields2511]

What are the chances that the government one day says, hmmm, we are missing out on these gains, and change the rules and suddenly tax ROTH monies also?

[@Stashmo]

Not gonna happen retroactively to $ already in Roth. But they did reduce benefits of inherited Roths prospectively. And could kill future Roths altogether.

[@prettybrwneyez7757]

Right on time!

[@seatownboy206]

Why should you pay taxes out of your own pocket instead of money from 401k?

[@rbb7344]

Ultimately you are wanting to keep as much money in 401K, IRA and Roth IRA, since these vehicles provide tax deferment or tax free growth. If you use let’s say $20K from these vehicles to pay the taxes you may owe, you will have $20K less in these vehicles. The suggestion is to pay taxes due from other money sources, so that you don’t lower what you already have in 401K, IRA and Roth IRAs.

[@davidmason1043]

What RB says is true, but to be slightly more specific, it's because if you pay the taxes from the 401k, that amount will be penalized at 10% (in addition to income tax on the entire amount if converting to Roth). Because essentially you are paying yourself so that you can pay the taxes, which is penalized under 59.5. hope that helps.

[@TheRooibosSuite]

Ok, so i want to make sure I understand this. I rollover my 401k to a Roth IRA, I would have to wait five years to withdraw from it?

[@jadday14]

Penalty free, yes ..... I believe

[@Stashmo]

@@jadday14 Until you’re 59.5, I believe.

[@straitjacketstudios]

Why must you first roll your 401(k) to a traditional IRA before rolling into a Roth IRA? Can you not roll from a 401(k) directly to a Roth IRA?

[@wanglee21]

I believe you can actually. I was reading into this also. Either or you will have to pay taxes on the move to a traditional to a Roth.

[@oliviajaworek7122]

Thanks for clear explanation

[@DangBerry-cd8pu]

im still confused ! we need a simple video about rolling a traditional 401k to a traditional roth to avoid the 20% tax. if u cash out on 401k its 20% taken for tax then 10% at the end of tge year. but if u transfer into a traditional roth then its only 10% taken for taxes then another 10% at the end of the year. am i mistaken?

[@CelticsWin7]

Question: When I leave my job, can I rollover my Roth 401k portion to a Roth IRA, BUT ALSO, leave my traditional 401k with my former employer?

[@alrocky]

Your old 401(k) plan typically allows you leave the traditional 401(k) balance as is but it's generally better to move an old t-401(k) to a traditional IRA.

[@natep7425]

Question: In 2020, I did a 401K conversion to a Roth IRA. I understand I need to pay taxes on the amount I moved over. I also did a backdoor ROTH IRA as well for $6K. My question is, do I pay taxes only on the 401K conversion to Roth IRA or do I need to pay taxes on both the 401K conversion as well as the backdoor ROTH IRA.

[@Stashmo]

No taxes on backdoor Roth if the conversion came from after-tax contributions to the traditional IRA. But converted gains would be taxed.

[@PaulKingMetal]

The best option is: Make another account just for Roth IRA and don't touch it. Try to save money, invest and don't spend it. Think for your future. Don't live just for now!

[@roderick.t]

Open a Roth IRA now so that the 5-year clock starts ticking. After the required time period, roll over your 401k funds (IRS takes its share) and you're free to take that money out anytime. Correct me if I'm wrong.

[@Dan-id9xf]

So if I have an existing Roth IRA I've had for years (greater than 5 years), will rolling TSP traditional funds start a new clock or will the original clock timeline be in effect for my existing Roth account?

[@roderick.t]

@@Dan-id9xf I also have a TSP and if that's similar to a traditional 401k then direct-rolling it into an existing (5+ years) Roth IRA won't restart your 5-year waiting period. Can someone here confirm this?

[@johnscott2746]

No each conversion has its own five year waiting period. If you are under 59.5 then you have to wait 5 years for EACH separate conversion. The good news is that if you have a Roth IRA that has been open for 5 years and you are 59.5 then all distributions are qualified and tax free. So you could open a Roth when you are 55 and roll your 401(k) over when you retire at 60 and the money is immediately available to you.

[@Rog502a]

5 year rule doesn’t apply at a certain age.

[@bobbobby01234]

When moving the Traditional IRA funds to the Roth IRA, is the amount you transferred treated as taxable INCOME? (as opposed to some other tax/taxable event)

[@thomasschellberg8213]

I hear this mantra about not paying the the tax on a Roth Conversion out of your pre-tax retirement account. All our money is in TIAA with no outside investments. We pay 12% on the money we convert (not exceeding $81,000 taxable income), and when we move to a state with an income tax, we will pay a marginal tax as high as 25%, considering the arcane marginal taxation on social security. We save that tax by cashing out our Roths, rather than withdrawing pre tax money. Maybe our situation is unusual.

[@Stashmo]

Hmm. Not sure I get your logic.

[@thomasschellberg8213]

@@Stashmo We did Roth conversions very cheaply after we were retired but still lived in a low tax state (no state income tax). Since I made the posting above, we moved to a state with an income tax. Now a smaller percent of retirement assets is subject to income tax, as we have converted some of our pretax assets to Roths.

[@Stashmo]

@@thomasschellberg8213 Sounds good. But what did you mean about “cashing out our Roths?” Did you mean the opposite?

[@thomasschellberg8213]

Now that we are in a state with income tax, we will cash out our Roths instead of our pre-tax accounts, when possible. We are still subject to RMDs on our taxable accounts. But in five years from the Roth conversion date, we will be able to withdraw these Roth funds tax free if we need the extra money.

[@Stashmo]

@@thomasschellberg8213 Hmm. There’s good logic in your initial “tax rate arbitrage,” but you’ll be losing the power of tax-free compounding in your Roth for every dollar you take out. Sounds self-defeating. What are your plans for the growing amount of taxable gains in your non-Roth? I’d encourage some mathematical analysis.

[@PH-dm8ew]

So why not take the taxes directly from the conversion. Can’t I take a cash equivalent from and invest that money separately and hav almost the same result as if my paid the taxes from the cash account.

[@Stashmo]

Please clarify. Any amount used to pay taxes that reduces the conversion defeats the main reason to convert.

[@Some1cool4u21]

Thanks for the education. I didn’t know by making the conversion from 401K to Roth IRA you would have to pay the taxes out of pocket.

[@CuriousMindCenter]

Me neither, I had thought that the broker will simply deduct the tax amount from my total 401K amount to be converted.

[@starofgideon]

@@CuriousMindCenter right! That's what I originally thought as well!

[@gmoney4292]

I just found out yesterday talking to adviser...that’s why I’m here looking at videos to learn more

[@Stashmo]

You could pay the taxes from your retirement gonna, but that would defeat the primary benefit of the conversion.

[@andygarcia3585]

If the 50k from the 401k is not entirely a contribution, does it become a full contribution when you roll it over to a Roth IRA?

[@CraftyComeLately]

5 years is not bad...especially if you're young. And it sounds smart so the growth can be all tax free. Can you convert 401k while still employed with the rmployer that offers the 401k plan?

[@alrocky]

You could invest in a Roth 401(k) instead of a traditional 401(k).

[@davidmason1043]

Most employers don't offer the option to convert from trad 401k to roth 401k inside the plan and while still employed. If you're lucky, you could check if your plan allows 'in-service distributions', which would allow you to roll out the traditional 401k to a trad IRA with company of your choice, then convert it to roth.

[@babycutezz5665]

5 year after we convert from 401k to Roth IRA, Can I pull the money out "without tax" because it's considered a contribution or I will have to pay tax up front after the conversion? Thanks

[@psychosav8712]

You’ll pay tax before it hits ROTH IRA no matter what, after five years you’ll pull cash with no penalty. I do believe

[@gmcenroe]

You didn't mention the age of the person doing the conversion, you don't pay any penalty if you are over 59 1/2, but you do pay a tax on the conversion.

[@JasonBuckman]

There's no tax penalty for conversions at any age.

[@gmcenroe]

@@JasonBuckman Yes there is, when you do a Roth conversion you are taxed, otherwise everyone would do the conversion to avoid paying taxes when they have to make mandatory withdrawls.

[@JasonBuckman]

@@gmcenroe Read what I said again. I didn't say conversions weren't taxed. I said there's no tax penalty. You said there was no penalty if over 59½. I corrected you by saying there is no penalty at any age.

[@gmcenroe]

@@JasonBuckman It depends on how you pay the tax. If you are under 59 1/2 on $15,000 and pay $3,000 tax out of the conversion you will pay a 10% penalty on the $3000 because it is considered an early withdrawal.

[@JasonBuckman]

@@gmcenroe Paying the tax with money from inside the IRA isn't a conversion. That's a withdrawal/distribution. There may be a tax penalty on the withdrawn/distributed amount, but there is never one on the conversion itself.

[@fungalcream3814]

This is a great video. I plan to retire early prior to my nominal retirement age. I wanted to place my money into my personal portfolio and live off passive didvend income. This helps with a stretgy to do so!

[@Stashmo]

Living off capital appreciation is just as good as dividends, often better.

[@rappwash]

so if you converson of $50,000 from 401k to a Roth IRA abd have to wait 5 years what happens the following if you convert another $50,000. I think this starts a second clock or 5 years,, Is my thinking correct?

[@henryrivas8999]

Yep, that's my understanding

[@donaldlynch4509]

Roughly how much would 10 to 50 thousand cost you in taxes if you switched it from regular 401k to Roth IRA?

[@wanglee21]

10-50k plus your total annual income, then google your government and taxes brackets to determine your total from both combined.

[@mmcfly1035]

Are you explaining two scenarios. The first one you said you can get money right away and the second is five years correct me if I'm wrong or are you just expanding your explanation of the whole scenario?

[@CuriousMindCenter]

co-ask. it is very confusing.

[@starofgideon]

The latter.

[@jimbowlan5804]

The five year window is for tax free

[@Rosa16307]

why i have to wait 5 years if the money is been already in the 403b for years? and why not to roll over direct to a Roth IRA?

[@Stashmo]

Different tax rules for Roth IRAs. It seems cleaner/clearer to do the two-step.

[@mrkinla]

Hi, Dustin. I'm a bit confused. My understanding from my plan administrator, and based on all i've ever been taught, is there is no withdrawal PENALTY (but you still have to pay the taxes) if you convert 401K money into an existing Roth account that is at least 5 years old AND you are past 59-1/2. Are talking about a Roth that is new (less than 5 years old) and you have not reached 59-1/2? I think the caveat here is that any owner of a Roth has to wait 5 years AFTER THEIR FIRST CONTRIBUTION before they can withdraw penalty free AND meet the age exception. I opened my Roth about 9 years ago with $100 just to get the clock started. Now that I am past 59-1/2 and just did a substantial rollover, all of that Roth money including the amount rolled over into it is available to me, penalty free; I will owe the taxes next year because the IRS considers it income, and I wanted to rollover a full base amount without an immediate tax payment. However, it would not make sense for me to withdraw from the Roth for about a decade so that I can enjoy the investment growth - hopefully.

[@broent5]

When I convert 401(k) to a Roth account I understand you can’t touch it for five years, but what about I’ve already had the Roth account over five years already

[@Stashmo]

Please check, but I think each conversion has its own 5-yr timeline until you hit 59.5. Doesn’t apply to annual contributions, I believe.

[@dark_winter8238]

If you roll a Roth 401k into an roth IRA would you have access to withdraw everything that was in the 401k tax free in 5 years or just the contribution?

[@TravelingTheWorld1993]

I am 40 years old. I have a Traditional and a Roth 401k. All of my contributions are to my Roth 401k now. can I convert my Traditional 401k to Roth? and could they tax the tax from the sale or do I need to pay the taxes from my personal bank account?

[@UrAshWhole]

What if you your 401k account is already an aftertax and want to convert to roth? Still taxable event?

[@julhe8743]

What about if I have an Roth 401k from a old job and I’m 59 1/2 y/o I rolled over fidelity into an Roth 401k can withdraw all the money and pay taxes?

[@wanglee21]

If Im not mistaken as long as you have had the account open for over 5yrs your age qualifies you for no taxes with any Roth accounts.

[@ramzee2581]

Excellent video,thanks for the info. I’m a bit puzzled: I quit my job last year and started my own business, so this tax year my income won’t be as high as it was with my previous job. I have $20k on 401k. Do you think I should roll to a Roth ira or just leave my 401k as is for a couple yrs and then rollover. This yr I just want to contribute $6k once I open the Roth. Thanks!!

[@julioerodriguez6097]

Can you go more in depth on the Roth five year rule? I'm 52 yrs old and I have a traditional/Roth 401K combined account. I want to quit my job and retire at 54. I'm planning to transfer my Roth 401K portion to my Fidelity Roth and my regular 401K portion to my Fidelity rollover IRA account after quitting. Can I do that without tax penalty and not worrying about the 5 year IRS rule? I know you suppose to be 59 1/2 to be on the clear with the IRS. Thank you in advance!

[@Stashmo]

Just don’t take any Roth $ out until 59.5.

[@ronnyatdrik4700]

So if i transfer $3000 from my 401k to my Traditional Ira and I grew that money to $8000 and want to convert to Roth. How much of that money I can and how soon can I withdraw?

[@brucesmith6868]

Thanks Dustin great info 👍 not sure who the TROLL is that gave you a " thumbs down" . Probably one of your competitors .

[@bobackerman54]

Don't know if you did a video on this, but what if I rollover $500k and want to do roth rollovers of $30k/yr to stay within 12% tax bracket... how would this be done and how would five year rule apply and when could i take any money out of accounts ???

[@barrybmw6101]

Please verify my answer answer, but I believe that if the account has been open for at least five years, you are older than 59 1/2 then you can take the principal out whenever you like without penalty. It’s only the interest, dividends, capital gains, i.e. anything that it earned that has to stay in for five years before you can take it out. But note that when you take things out, it’s considered that you’re taking out the principal first, only once all of that is exhausted. Do they consider that you’re taking out the gains.

[@jboughtin7522]

You can only take distributions from a Roth IRA pre age 59 1/2 without a 10% penalty if you meet certain criteria, college expenses, certain medical expenses, etc. There are others you can research. Also, money converted from a traditional IRA to a Roth IRA is taxed as income and can put you in a higher tax bracket which means you would pay higher taxes on it than if you simply made smaller withdrawals at retirement age. I considered doing this conversion and came up with it's a bad idea unless you're ok with paying higher taxes or penalties or meet specific criteria.

[@johnscott2746]

No, you can only take EARNINGS if you meet certain criteria. You can always take your contributions out at any time with no tax or penalty.

[@caball3ro]

Timely video as I'm about to transition to a new job and was thinking of this same scenario. Using your example, what would taxes on the 50k to Roth look like? Is the transfer amount just added as income and your taxes on all income at year end, or is it a different set of rules for Roth? I may just go to a regular IRA just because going to Roth would push me into a new tax bracket. Thanks for any insight you can provide!

[@barrybmw6101]

Yes, it is added to your normal income.

[@Stashmo]

@@barrybmw6101But still might be worth it, especially if you’re young.

[@barrybmw6101]

@@Stashmo it might be. You should have as a number 1 priority getting as much money into your Roth IRA as possible. There are only a few ways to do this and there are limits that get in the way. Look at doing backdoor and mega backdoor Roth contributions.

[@Stashmo]

@@barrybmw6101 I generally agree, but it’s not that simple for every financial scenario.

[@barrybmw6101]

@@Stashmo not disagreeing just want to understand, would you describe a case where it is better to prioritize a different investment vehicle? I like to hear/read all ideas to see if I should modify my strategy some. No worries if you prefer to keep it private.

[@ricklenegan2294]

I think you failed to specify the "5 year window" applies only to those under the age of 58 1/2. At least I hope so, LOL. Please correct me if I'm mistaken and accept my gratitude for your advice.

[@AlienGrade]

I need this answered.

[@johnscott2746]

The IRS says that as long as ANY Roth IRA has been open for 5 years and you are 59.5, then all distributions are qualified and tax free and penalty free. So, the 5 year rule on conversions does not apply.

[@sirdewd2197]

Clarification for my peace of mind when you say “401k” you mean traditional and not Roth, right, or do they both (traditional and Roth 401k) follow the same rules in this case? Reason for my question is I have a Roth401k

[@kckuc310]

Sir Dewd leave it, he meant traditional, your already in a Roth

[@ericjuli6576]

If you’re getting an employer match, that is going in pre-tax. Not sure if all Roth 401k’s allow this, but at my company we can do a Roth conversion on their match and just pay the taxes.

[@ramzee2581]

Excellent video as always, thanks for the info. I’m a bit puzzled: I quit my job last year and started my own business, so this tax year my income won’t be as high as it was with my previous job. I have $20k on 401k. Do you think I should roll to a Roth ira or just leave my 401k as is for a couple yrs and then rollover. This yr I just want to contribute $6k once I open the Roth. Thanks!!

[@Stashmo]

It’s a good time for you to convert the 401k to a Roth, especially if you’re young and your income will be reduced.

[@wanglee21]

So you're saying after 5yrs its tax free?

[@julhe8743]

Great video, from an old job if I rolled over 25k from my Roth 401k to a Roth IRA I have to pay taxes???

[@redsoxwinagain2007]

No. You already paid the taxes on it.

[@iManipulator]

Is there still a 6k limit? And if you have that much already in your IRA, couldn't you then pull the money out? Because let's say there is 10k in it., you roll over 5k. Not you have 15k but you could pull out that 5k because you already had 5k into it

[@johnscott2746]

The way it works is: you have to have ANY Roth IRA open for at least five years and be at least 59.5 before you can withdraw earnings . You can take contributions out at any time with no tax or penalty. If you do a conversion, each conversion has a separate 5 year waiting period. After the five years, your conversion is treated as a contribution so you can take it out without penalty. You already paid the tax on it. These rules only apply if you are under 59.5 because according to the IRS, if you have had ANY Roth IRA open for five years and you are 59.5 then all distributions are qualified and tax free and penalty free.

[@jeffreylouism]

Great video! Love your content. Quick question. My wife has a traditional 401k (only about 3k) from a previous employer. We want to convert it to a Roth IRA. Is it a good idea? Any advice helps. Thanks.

[@psychosav8712]

Absolutely, I would because you can start investing that money and it will be TAX FREE a few years down the road.

[@liemphan7744]

I have a question that I can’t find the answer anywhere. I currently have a Roth401k with my current employer, I also have a Roth IRA. I don’t like the investments offered in my R401k can i roll what I currently have into my Roth IRA so I can invest in what I want? I’m still working for the company and I want my future contributions to continue to go into the Roth 401k, I just want to know if it’s possible to roll out what’s already in there while not changing anything or still with the company.

[@alrocky]

You generally cannot move money from your retirement plan with your *current* employer out to a Roth IRA.

[@Stashmo]

See if your employer will improve your investment options. Employers have some liability if their 401k plan sucks.

[@Brah_Lizard]

I'm employed still and turd company won't let me roll over 401k

[@alexveliz5961]

Is there a limit that can be rolled over into the Roth? Like the 6000 yearly limit or can the entire balance be rolled over?

[@JasonBuckman]

The limit is your balance.

[@Stashmo]

No limit. Conversions totally separate from contributions.

[@ncjeffhyder]

When it time to go from IRA Roth, what increments of money should you transfer?

[@TheBobmarley3]

Anyone whos curious look up roth conversion ladder

[@melvinmelendez5218]

Hey , is this a good time to cash out ? By the way my laid off is effective on August 15th.

[@rappwash]

opps i meant if you convert the next year another $50,000 so each 50,000 would have its own clock

[@TraderJoesTakis-9]

I won't subscribe but i'll give you a like. Thanks.

[@dizzolve]

5:10 but after your 5 year rule expires, you can take money out penalty free?

[@ihavehotmail2]

Correct it’s considered a contribution at that point

[@jorgitoz28]

Can you go the other way? From roth to 401

[@alrocky]

You mean to move a Roth IRA to a Roth 401(k)?

[@jorgitoz28]

@@alrocky yes

[@jorgitoz28]

Regular IRA to 401k

[@alrocky]

@@jorgitoz28 You can move a traditional IRA to a traditional 401(k). You may not move a Roth IRA to a Roth 401(k) and you generally would not want to do so as there is really no advantage and several disadvantages even if you could.

[@chandra9491]

Your message is not very clear!! bit confusing!!

[@Jeffdachefz]

can you just convert after tax non roth 401k money to a roth ira and bypass the roth limits?

[@fenderbassnguitar]

YES! But you have to roll the earnings from the After Tax contributions out to a Traditional IRA as well, you can't leave it in your 401k. Then do the conversion from the traditional IRA to Roth on the earnings. But like he said have they money some where else i.e. Savings Account, to pay the taxes owed. Don't withdrawal from account to pay it

[@SantaBarbaraAlberto]

Dustin - Are you saying that if we rollover to a traditional IRA first when we convert into a Roth IRA we only have a five year restriction in the gains of the conversion not the contributions? Mmmm...we are in the midst of converting 401K to Roth to minimize RMDs. I am 63 not and I am delaying SS to 66. My wife is 55 younger. We are looking at $400K to convert in to separate 401Ks. I have a pension.

[@bratycasper1610]

anyone can answer, im thinking of leaving my job can i take my 401k to roll over immediately in a ira and can i start using this ? do i have to wait to 69 or 70

[@salinas831100]

So I can’t move a 401k to a rollover ira then a Roth without getting early withdraw penalized... I understand getting taxed but the penalties from the 401k still apply?

[@MatthewBuntyn]

You aren't penalized for the rollover, or the conversion. The penalty comes from withdrawing the conversion amount before 5 years has passed

[@rappwash]

do a direct transfer and there are no penalties only pay taxes when move the money the roth

[@1575murray]

@@rappwash That is true once you pay the taxes on the amount converted that money will grow tax free so the sooner you do it the better (usually).

[@davidelet3652]

The 5 year window applies to all contributions in a Roth IRA. It seems that you suggest that the 5 year window only applies to rollovers.

[@alrocky]

"5 year window applies to all contributions in a Roth IRA" --- There is no 5 year window for *Contributions* to a Roth IRA.

[@johnscott2746]

The only 5 year rule for the account itself is that the account has to be open for 5 years. There is no five year rule on contributions

[@go4384]

This stuff is a total crap shoot. No one knows where tax rates will be in the future. Hell, there might not even be an income tax in the future. You also might not ever live long enough to make use of the 401k funds.

[@CuriousMindCenter]

Great video. But, Roth IRA has a limit of $6000 or $7000 per year. Are you saying that when I convert my $80K traditional 401K dollars into Roth IRA, there is no such limit? I do understand that I'll need to pay tax on this $80K from my own pocket at conversion. Please clarify. Thank you!

[@alrocky]

Q1 Yes and you pay tax on the conversion.

[@CuriousMindCenter]

@@alrocky But that’s not my question. ;)

[@alrocky]

@@CuriousMindCenter Well if you have any other questions, I'll be sure to un-answer those too ...

[@CuriousMindCenter]

@@alrocky That’s nice. See where my question mark is in my original question. It’s not that hard. ;) Even though I already know the answer, but it maybe helpful for others if you can seriously respond to the question asked. :)

[@alrocky]

@@CuriousMindCenter Yes saw that. Your question was correctly answered.

[@jasonpatrickries]

So if you're 30 years old you can withdraw penalty free at 35. It's still way better than waiting until you're 59.5 years old. Seems like a bit of a loophole but maybe I'm missing something.

[@joesixpack7551]

If you are considering retiring 'early', don't consider doing ANYTHING with your 401K until you have a complete understanding of the "IRS rule of 55"

[@davidmason1043]

A couple caveats to this: 401k may have high admin fees or lack of good low expense ratio (fee) mutual funds. Compounded over time the fees will have a huge effect. Also, most 401k plans dong offer any way to convert trad to roth. Penalty free 401k access at 55 is only after separation of service, ONLY for that current company's 401k, not previous 401k's. Sure, may be possible to roll over old 401k into new employer. Lots of pros and cons and things to consider, but the most flexible is Roth IRA 5yrs after converting, as all principal is penalty and tax free.

[@liammclaughlin9917]

Don't people see how stupid it is to roll over a 401K to a ROTH? It is a DUMB move.

[@lizzy6158]

Lose the annoying intro