Rollover 401k to Roth IRA or Roth 401k

[skives]

I am currently deciding whether I should rollover my existing 401k to a roth ira or a in plan roth 401k. I currently have $108,780.25 to rollover and would be doing this over 4-5 years for tax reasons.

Moving forward I would contribute 15% to my company roth 401k.

Is there an advantage to rollover this money into a roth ira instead of a roth 401k? I know when I do retire I would rollover the roth 401k to a roth ira to avoid rmd's.

Thanks for the help.

[disneysteve]

Is there an advantage to rollover this money into a roth ira instead of a roth 401k? I know when I do retire I would rollover the roth 401k to a roth ira to avoid rmd's.

If your plan is for that money to ultimately end up in a Roth IRA, why not put it there directly?

Is there an advantage to the Roth IRA? Absolutely. You get full control of that money. You aren't limited to the investment options offered by the company plan. You can better control investment choices, expenses, allocation, etc.

[skives]

If your plan is for that money to ultimately end up in a Roth IRA, why not put it there directly?

Is there an advantage to the Roth IRA? Absolutely. You get full control of that money. You aren't limited to the investment options offered by the company plan. You can better control investment choices, expenses, allocation, etc.

can I keep rolling over the money each year till I am done into the same roth ira?

Other than more control and mutual fund options is there any other advantages to the roth ira rollover? I like the roth 401k because I can contribute up $18,000 a year.

[disneysteve]

can I keep rolling over the money each year till I am done into the same roth ira?

Other than more control and mutual fund options is there any other advantages to the roth ira rollover? I like the roth 401k because I can contribute up $18,000 a year.

You are still at this job currently, right? Are you allowed to rollover the 401k to a Roth IRA? I don't think that's usually an option but your plan may differ.

It sounds like you have a 401k and want to convert that money into a Roth 401k and then direct future contributions to the Roth 401k. Is that correct?

[Thrif-t]

I'm not sure about being able to roll over to a Roth 401k but I will say if you have all your money in a Roth 401k you are still required to take out RMD. It's only an Individual Roth IRA that you don't have the RMD:

If, however, you are retired, you do need to take RMDs from either kind of account after you turn age 70½, although your Roth 401(k) withdrawals will be tax-free. ... Roth IRAs are not subject to required minimum distributions.2 days ago
Avoiding Required Minimum Distributions from Roth 401(k)s - Kiplinger
https://www.kiplinger.com/.../T001-C...um-distributio...


If it were me and I could afford the taxes, I'd roll a little each year into a Roth IRA. Are you married? You can roll some into your spouse's name and get it all rolled over in half the time.

[Thrif-t]

https://www.google.com/amp/s/amp.usatoday.com/amp/32893881#ampshare=https://www.nerdwallet.com/blog/investing/roth-401k-vs-roth-ira-which-one-is-better-for-you/

I thought you might like to read this article😊

[Gailete]

To me, I would think one of the biggest things about the Roth IRA is that it is your money that you can get to if and when you need it at any time as long as you don't tap the profits (dividends & interest) if you aren't at retirement age. Also I believe that as they said no RMD and if you don't need the money, then your heirs can inherit it.

[Like2Plan]

skives,
There are lots of things to consider so that you don't end up with unintended consequences.
1. Are you still employed with the company that holds your 401K?
2. If yes, do they offer in service rollovers?
3. Do they offer in plan conversions (from the traditional to the Roth option)?
4. Does your 401K offer less expensive/institutional funds in which to invest? (Lower fees than what you could invest in on your own)
4. Do you wish to save more than 18,500 in a tax advantaged account? (Contribute to an IRA, too?).
5. If #4 is Yes--are you eligible to contribute to a Roth directly or would you have to invest in a traditional IRA and convert to Roth?

If your plan allows in plan conversions and you have really great funds with low fees--you could do all your converting in plan and then roll over at your convenience. This would allow you to do conversions inside your 401K without impacting possible back door conversions to Roth with your IRAs.

If you are allowed is service rollovers (I don't "think" this is typical if you are not 59.5) and you are not concerned about doing back door Roths and you don't have any really great investment options in your 401K (or they don't allow in plan conversions)--rollover to IRA and convert to Roth incrementally might be a good option.

If you do a conversion "in mid air" from your 401K directly to Roth, you could do a little each year without otherwise impacting your other IRA contributions.

[dczech09]

As far as I know, you cannot rollover a 401k balance into an IRA as long you are employed by the sponsoring 401k company. So your only option would be the Roth 401k, if your employer allows that option.

Rolling over balances from an employer-sponsored plan to an IRA while working for the sponsoring 401k company is a characteristic of the 403b plan.