I have about $105K in my 401k. I was recently laid off. Should I just leave it where it is or pull it out to invest somewhere else?
Put it all into a Fidelity Freedom 2050 fund and let it ride.
She could convert it into a Roth IRA, paying taxes upfront, if she’s not maxing out contributions in another Roth account.
You can convert it to a Roth anytime, but just remember it’s a taxable event, so you’ll need to pay taxes on it. It’s best if you can pay those taxes out of pocket rather than withdrawing from the Roth for the taxes.
So you’re saying that converting won’t affect the annual contribution limit? Does that mean a rollover after conversion is also allowed?
Exactly, you can roll over any amount, even more than the annual contribution limit. If you couldn’t, things like rolling over a 401k wouldn’t be possible.
So, can people convert their pre-tax accounts after retirement to avoid paying taxes on withdrawals?
Yes, they’d be paying taxes at the time of conversion. The decision is really about whether it makes sense to pay the taxes now or defer them to later.
You can convert to a Roth, but keep in mind you’ll pay taxes on it. Best to use cash for the taxes rather than pulling from the Roth.
Are you a bot? That’s exactly what I just said.