Can I roll my traditional 401(k) account balance over to a Roth IRA?

retirement egg

Yes, you can make a direct or 60-day rollover from a 401(k) plan [or other qualified plan, 403(b) plan, or governmental 457(b) plan] to a Roth IRA, as long as you meet certain requirements.*

First, you must be entitled to a distribution from your plan. While you can always access your account when you terminate employment, in some cases you may be able to withdraw your own or your employer's contributions while you're still working (for example, at age 59½).

[Note: Your plan may also permit the "in plan" conversion of all or part of your account balance to a Roth account, regardless of whether you're eligible for a distribution from the plan. Check with your plan administrator.]

Second, your distribution must be an "eligible rollover distribution." Distributions that cannot be rolled over include hardship withdrawals, certain periodic payments, and required minimum distributions (RMDs).

Third, you must include the taxable portion of the distribution in your gross income in the year you make the rollover ("conversion"). But that's the price you have to pay to potentially receive tax-free qualified distributions from your Roth IRA in the future.

Fourth, if your distribution includes both after-tax and pre-tax dollars, you can generally direct that only the after-tax dollars be rolled over to the Roth IRA (resulting in a tax-free conversion), while making a tax-deferred rollover of the pre-tax dollars to a traditional IRA.

When evaluating whether to initiate a rollover from an employer plan to an IRA, be sure to: (1) ask about possible surrender charges that your employer plan or IRA may impose, (2) compare investment fees and expenses charged by your IRA with those charged by your employer plan (if any), and (3) understand any accumulated rights or guarantees that you may be giving up by transferring funds out of your employer plan. Also consider all of your distribution options, including leaving the money in your employer's plan, transferring the funds to a new employer's plan, or taking a cash withdrawal.

*If you make a 60-day rollover, your plan will withhold 20% of the taxable portion of your distribution for federal income tax purposes.

About 360 Financial Group
360 Financial Group, founded in 1990, provides a holistic approach to comprehensive wealth management as well as tax and accounting and investment management services.  At 360 Financial Group, our MISSION is to be our clients’ primary advisor.  We believe our knowledge, experience, and intuitive approach to tax and financial planning gives our clients the confidence they need to help them realize their dreams.       

Registered Representative, Securities Offered Through Cambridge Investment Research. Inc., a Registered Broker Dealer, Member FINRA, SIPC and Investment Advisor Representative, Cambridge Investment Research Advisors, Inc., a Registered Investment Advisor. Small Business Group, Inc. and Cambridge are not affiliated.

About Cambridge
Cambridge Investment Group, Inc. is a privately-controlled firm with a national reach across the financial services industry consisting of multiple broker-dealers and RIAs, including: Cambridge Investment Research Advisors, Inc. – a large corporate RIA; and Continuity Partners Group, LLC – a special purpose broker-dealer and registered investment advisor; and Cambridge Investment Research, Inc. – an independent broker-dealer, member FINRA/SIPC, that is among the largest privately-controlled independent broker-dealers in the country supporting approximately 3,000 independent financial professionals nationwide who serve their clients as registered representatives and investment advisor representatives, choosing to use either Cambridge’s firm Registered Investment Adviser or their own. For more information visit www.joincambridge.com

IMPORTANT DISCLOSURES

Broadridge Investor Communication Solutions, Inc. does not provide investment, tax, or legal advice. The information presented here is not specific to any individual's personal circumstances.

To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances.

These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable—we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.

Prepared by Broadridge Investor Communication Solutions, Inc. Copyright 2016.

Top Story

i95 Business Article for 360 Financial Group

i95 Business Highlights Carl Strozyk and 360 Financial Group as Harford County Business Leader

8/9/2017

As part of its August issue, i95 Business shined a spotlight on Harford County business leaders, and Carl Strozyk of 360 Financial Group is honored to be chosen.

Click here to see the full article on page 49: http://i95business.com/2017/08/partners-financial-journey/

read more

Features

retirement egg

Can I roll my traditional 401(k) account balance over to a Roth IRA?

7/20/2017

Yes, you can make a direct or 60-day rollover from a 401(k) plan [or other qualified plan, 403(b) plan, or governmental 457(b ...

read more
IRA Rollover

What is a rollover IRA, and do I need one?

7/17/2017

Generally, the term "rollover IRA" refers to an IRA that you establish to receive funds from an employer retirement plan like a 401(k). A ...

read more
Health Wealth

"Always keep two things in stock: crunchy vegetables and an emergency savings account."
Michael F. Roizen, MD, and Jean Chatzky, personal finance commentator
Authors of Ageproof: Living Longer Without Running Out of Money or Breaking a Hip

¹ American Psychological Association, February 4, 2015; The Telomere Effect: A Revolutionary Approach to Living Younger, Healthier, Longer, by Blackburn and Epel; and Ageproof: Living Longer Without Running Out of Money or Breaking a Hip, by Chatzky and Roizen

² The cost and availability of life insurance depend on factors such as age, health, and the type and amount of insurance purchased. A complete statement of coverage, including exclusions, exceptions, and limitations, is found only in the policy. It should be noted that long-term care carriers have the discretion to raise their rates and remove their products from the marketplace.

The Health-Wealth Connection

7/15/2017

It's a vicious cycle: Money is one of the greatest causes of stress, prolonged stress can lead to serious health issues, and health issues ...

read more

Archive

i95 Business Article for 360 Financial Group

i95 Business Highlights Carl Strozyk and 360 Financial Group as Harford County Business Leader

8/9/2017

As part of its August issue, i95 Business shined a spotlight on Harford County business leaders, and Carl Strozyk of 360 Financial Group is honored ...

read more
retirement egg

Can I roll my traditional 401(k) account balance over to a Roth IRA?

7/20/2017

Yes, you can make a direct or 60-day rollover from a 401(k) plan [or other qualified plan, 403(b) plan, or governmental 457(b ...

read more
IRA Rollover

What is a rollover IRA, and do I need one?

7/17/2017

Generally, the term "rollover IRA" refers to an IRA that you establish to receive funds from an employer retirement plan like a 401(k). A ...

read more
Health Wealth

"Always keep two things in stock: crunchy vegetables and an emergency savings account."
Michael F. Roizen, MD, and Jean Chatzky, personal finance commentator
Authors of Ageproof: Living Longer Without Running Out of Money or Breaking a Hip

¹ American Psychological Association, February 4, 2015; The Telomere Effect: A Revolutionary Approach to Living Younger, Healthier, Longer, by Blackburn and Epel; and Ageproof: Living Longer Without Running Out of Money or Breaking a Hip, by Chatzky and Roizen

² The cost and availability of life insurance depend on factors such as age, health, and the type and amount of insurance purchased. A complete statement of coverage, including exclusions, exceptions, and limitations, is found only in the policy. It should be noted that long-term care carriers have the discretion to raise their rates and remove their products from the marketplace.

The Health-Wealth Connection

7/15/2017

It's a vicious cycle: Money is one of the greatest causes of stress, prolonged stress can lead to serious health issues, and health issues ...

read more
Future of Federal Estate Tax

1 2015 Field Guide to Estate Planning, Business Planning & Employee Benefits

The federal estate tax has been enacted or repealed a number of times over the years, while undergoing many changes. Tax reform, including possible repeal of the estate tax, is back in the spotlight once again.

Future of the Federal Estate Tax

7/8/2017

While no one can predict the future, the possibility of tax reform is once again in the spotlight. If it occurs, it may very well ...

read more
Rising Interest Rates

Don't Let Rising Interest Rates Catch You by Surprise

7/1/2017

You've probably heard the news that the Federal Reserve has been raising its benchmark federal funds rate. The Fed doesn't directly control consumer ...

read more
Climate Change

I'm thinking about buying a new home. Should I consider the risk of climate changes?

6/25/2017

If you're thinking about buying a home, you probably have a checklist of qualities you're looking for as you shop around.

But have ...

read more
Roadside help

Should I purchase towing and rental reimbursement coverage for my car?

6/23/2017

For many individuals, driving a car is a necessity.

Whether you're driving to work or running errands on the weekend, not having your main ...

read more
Simple IRA

You can also set up a 401(k) plan as a SIMPLE plan. However, there's little advantage in doing so, because you'll have the same lower contribution limits as a SIMPLE IRA plan while giving up the ease of administration that makes SIMPLE plans attractive in the first place.

*The 3% of pay match may be reduced to as little as 1% in any two of five years.

Setting Up a SIMPLE IRA Plan: It's Simple!

6/18/2017

Looking for a retirement plan for your employees that's easy and inexpensive to administer?

Well, there may be a simple answer: the Savings Incentive ...

read more
Federal Reserve

*You should consider carefully the consequences of an in-service distribution. Distributions from your pre-tax TSP account are subject to federal income tax, and an additional 10% penalty tax will generally apply to distributions made prior to age 59½. The taxation of in-service withdrawals from a Roth TSP account depends on whether the distribution is a qualified or nonqualified withdrawal. Consideration should also be given to the overall depletion of your retirement savings. In addition, if you're married, your spouse must be notified of any request for an in-service distribution, and in most cases must consent.

Withdrawal Options for Your Thrift Savings Plan (TSP)

6/11/2017

The Federal Thrift Savings Plan (TSP) is a tax-deferred retirement savings and investment plan set up to help federal civilian employees and military personnel save ...

read more
Four Numbers

Four Numbers You Need to Know

6/5/2017

When it comes to your finances, you might easily overlook some of the numbers that really count. Here are four to pay attention to now ...

read more
Coffee Ethics

What is an ERISA fiduciary?

5/22/2017

The Employee Retirement Income Security Act (ERISA) was enacted in 1974 to protect employees who participate in retirement plans and certain other employee benefit plans ...

read more
Are you ready to retire?

Are You Ready to Retire?

5/15/2017

Here are some questions to ask yourself when deciding whether or not you are ready to retire.

Is your nest egg adequate?

It may be ...

read more
Florida Couple

Is It Wise to Trade Your Pension for a Lump Sum?

5/11/2017

Most private employers have already replaced traditional pensions, which promise lifetime income payments in retirement, with defined contribution plans such as 401(k)s. But ...

read more
Home Tax Advantages

Tax Benefits of Home Ownership

5/8/2017

Buying a home can be a major expenditure. Fortunately, federal tax benefits are available to make homeownership more affordable and less expensive. There may also ...

read more
Cyber Brain

Is Smart Beta a Smart Strategy for You?

5/1/2017

Traditional investment indexes such as the S&P 500 are weighted based on market capitalization, the value of a company's total outstanding stock. This ...

read more
Bond Rating Agency

What Do Bond Rating Agencies Use?

4/24/2017

Bond rating agencies typically use similar scales, and it may be helpful to understand how to compare ratings from multiple agencies.

This chart compares bond ...

read more
Bond Ratings

What are Bond Ratings?

4/17/2017

Bond ratings are an essential tool when considering fixed-income investments. Ratings provide a professional assessment of credit risk, or the risk of default, which can ...

read more
Spring Cleaning Finances

Spring Cleaning Your Finances

4/10/2017

The arrival of spring often signifies a time of renewal, a reminder to dust off the cobwebs and get rid of the dirt and grime ...

read more
Retirement age couple

Converting Retirement Savings to Retirement Income

4/7/2017

You've been saving diligently for years, and now it's time to think about how to convert the money in your traditional 401(k ...

read more
Carl Strozyk

"Thank you for your interest in 360 Financial Group. I look forward to learning more about your goals."

-Carl Strozyk, President

Your Journey Starts Here

First Name
Last Name
Email
Phone
How can we help you?