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t401k to Roth IRA process
Old 11-26-2018, 01:24 PM   #1
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t401k to Roth IRA process

Fido is telling me that moving funds from a traditional 401k to a Roth IRA can now be done in one direct step. Previously the regs required the funds move from the t401k to a tIRA first, and next from tIRA to Roth IRA. I can't find confirmation online. Is a t401k direct to Roth IRA now permitted, and taxed as a conversion to Roth?
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Old 11-26-2018, 01:42 PM   #2
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A Google search of "pre tax 401k to roth ira" brings up several sites that confirm this is possible.
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Old 11-26-2018, 02:10 PM   #3
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Originally Posted by gwraigty View Post
A Google search of "pre tax 401k to roth ira" brings up several sites that confirm this is possible.
Link? The ones I see use the tIRA intermediary step.
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Old 11-26-2018, 03:23 PM   #4
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I have a vague recollection of a previous thread that said that it could be done it one step.. I remember it being a surprise to me.
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Old 11-26-2018, 03:33 PM   #5
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https://www.fool.com/retirement/iras...-roth-ira.aspx
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Old 11-26-2018, 03:34 PM   #6
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This site suggests it depends on the custodian.

https://www.goodfinancialcents.com/c...les-from-401k/

Back when conversion recharacterization was allowed I suspect some custodians preferred forcing a tIRA intermediary step so their clients could undo the conversion to Roth. With the conversion undo now disallowed apparently more custodians are permitting t401k direct to Roth IRA.
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Old 11-26-2018, 03:42 PM   #7
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I am pretty sure that I have been doing this for years.

I think IRS Pub 590-B addresses this.
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Old 11-26-2018, 04:35 PM   #8
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Originally Posted by GrayHare View Post
Link? The ones I see use the tIRA intermediary step.
Near the bottom of the first page of a Google search:

https://investor.vanguard.com/401k-rollover/options

"Roll over a traditional 401(k) into a Roth IRA—this would be considered a "Roth conversion," so you'd owe taxes."

An article devoted to the subject:

https://www.rothira.com/blog/3-benef...nto-a-roth-ira

Better yet, straight from the IRS:

https://www.irs.gov/pub/irs-tege/rollover_chart.pdf
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Old 11-26-2018, 04:43 PM   #9
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It may very well depend on your 401k custodian.

When rolling over combined 401k/Roth 401k funds from DW's 401k I was initially required to pull proportionate amounts from the 401k and Roth 401k and transfer them into just one tIRA/Roth IRA. No other choice. I called Fidelity about how to handle that (Roth funds to a tIRA, or traditional funds to a Roth). They said "we'll do whatever you tell us to do", so it was my impression that I could fix it to place the correct funds into the tIRA and Roth IRA accounts. I chose to place all the funds into a Roth IRA, since that seemed straight forward as a Roth to Roth transfer and a 401k to Roth IRA conversion that I should be able to recharacterize if necessary. Placing Roth funds into a tIRA seemed too risky, despite Fidelity's assurances. So I was pretty much forced to do a 401k to Roth IRA conversion. That was a few years ago, and everything worked fine and didn't cause a problem with the IRS.
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Old 11-26-2018, 05:05 PM   #10
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Originally Posted by gwraigty View Post

Better yet, straight from the IRS:

https://www.irs.gov/pub/irs-tege/rollover_chart.pdf


That IRS chart only covers Roth 401k to Roth IRA conversion.
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Old 11-26-2018, 05:41 PM   #11
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That IRS chart only covers Roth 401k to Roth IRA conversion.
It also covers traditional 401K to Roth IRA.

ROLLOVER CHART
Roll To:
.........................................Roth IRA

Roll From:
Qualified Plan(1).......................Yes
(pre-tax)

1)Qualified plans include, for example, ........., 401(k)
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Old 11-26-2018, 06:08 PM   #12
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Originally Posted by jazz4cash View Post
That IRS chart only covers Roth 401k to Roth IRA conversion.
Thanks to kaneohe for showing where the chart does show the relevant info.
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Old 11-27-2018, 02:16 PM   #13
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Originally Posted by gwraigty View Post
Thanks to kaneohe for showing where the chart does show the relevant info.

Yes. I stand corrected.
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