In-plan Roth conversions

[monte1022]

My old employer is late to the Roth 401k party. However, now that they are in the game, the plan will allow for in-plan conversions. We are currently managing our income for ACA purposes and fully understand how tIRA conversions increase ACA MAGI, but does anyone know how an in-plan conversion would impact ACA MAGI? Same?

 

[dknighd]

I'm pretty sure an in plan 401k Roth conversion gets taxed the same as a tIRA to RIRA.

It might be worth doing if the 401k offers something the RIRA does not. But the Roth 401k has a separate 5 year clock from the Roth IRA.

 

[RetireBy90]

I would expect any conversion, I plan or not to add to your taxable income and thus the MAGI.
The 5 year rule for Roth starts when you fund any Roth, so you could open a Roth IRA and deposit say $20 to start the clock. Some may require a minimum to open the account but Idid this for my brother at fidelity without a problem.
Personally I’d wait for pb4uski to chime in and I’d trust his advice on the matter.

 

[dknighd]

I would expect any conversion, I plan or not to add to your taxable income and thus the MAGI.
The 5 year rule for Roth starts when you fund any Roth, so you could open a Roth IRA and deposit say $20 to start the clock. Some may require a minimum to open the account but Idid this for my brother at fidelity without a problem.
Personally I’d wait for pb4uski to chime in and I’d trust his advice on the matter.

I'm 90% sure the 5 year clock on a Roth 401k is not connected to the 5 year clock on a Roth IRA.


I also trust pb4uski advice. But he/she is not signing your tax forms. You have to figure out for your self how these things work

 

[monte1022]

I have a very old Roth IRA so the 5yr rule is not a problem. I was just wondering if converting ie. 50k trad 401k to 50k Roth 401k increases ACA MAGI the same way it does when converting a tIRA to Roth IRA. It would seem likely, but who knows? Maybe there is a special rule for 401ks. Doubtful though.

 

[SevenUp]

Maybe there is a special rule for 401ks.

Nope.

 

[JoeWras]

Yeah, in-plan 401k conversions are the same, and essentially at Roth 401k is the same as a Roth IRA. The "secure act" law cleaned up one of the differences that did previously exist regarding RMD treatment that was not favorable to Roth 401ks. That's now been fixed.