Early Retirement & Financial Independence Community - View Single Post

LOL! · 07-09-2009, 06:54 AM

I have not done this yet, but I am not surprised since you are talking about a 401(k) here and not a personal account.

The employer sponsors the 401(k), but has Vanguard running it. Also you don't transfer shares. You transfer money. So the shares in the 401(k) have to be liquidated to get the money.

They cash out the 401(k) which is an employer thing with funds offered by the employer. There is a check involved: 401(k) Rollover | Rollover IRA

It just happens in Dad's case that the 401(k) is at Vanguard and that he wants to open his Roth at Vanguard. What if his 401(k) was at Fidelity and he wanted to open a Roth at Vanguard? Whether the check goes from Vanguard to Vanguard or from Vanguard to Dad back to Vanguard is not a big deal. Or not converting at all may mean he is not taxed on it at all (if his income is low enough)?

And Dad knows that he will have to pay income taxes on the Roth conversion, right? And he has cash outside the 401(k) in order to pay those taxes, right? Also does he know that rolling over to a traditional IRA, then converting a little of that traditional IRA each year may lower his taxes on it significantly?

07-09-2009, 06:54 AM	#2
LOL! Thinks s/he gets paid by the post Join Date: Jun 2005 Posts: 3,080	I have not done this yet, but I am not surprised since you are talking about a 401(k) here and not a personal account. The employer sponsors the 401(k), but has Vanguard running it. Also you don't transfer shares. You transfer money. So the shares in the 401(k) have to be liquidated to get the money. They cash out the 401(k) which is an employer thing with funds offered by the employer. There is a check involved: 401(k) Rollover \| Rollover IRA It just happens in Dad's case that the 401(k) is at Vanguard and that he wants to open his Roth at Vanguard. What if his 401(k) was at Fidelity and he wanted to open a Roth at Vanguard? Whether the check goes from Vanguard to Vanguard or from Vanguard to Dad back to Vanguard is not a big deal. Or not converting at all may mean he is not taxed on it at all (if his income is low enough)? And Dad knows that he will have to pay income taxes on the Roth conversion, right? And he has cash outside the 401(k) in order to pay those taxes, right? Also does he know that rolling over to a traditional IRA, then converting a little of that traditional IRA each year may lower his taxes on it significantly?