ST Alpha - "There's no "Traditional Roth" - there's Traditional (IRA/401k), and Roth (IRA/401k) -- (edited)" (Reading a Post)

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In response to "I don't have IRAs. I only have my 401K" by ty97

There's no "Traditional Roth" - there's Traditional (IRA/401k), and Roth (IRA/401k) -- (edited)

Posted by Max Dec 26 '20, 14:57

If you're talking about money that was deducted from payroll pretax:
Traditional 401k --> Traditional IRA = no tax
Traditional 401k --> Roth IRA = income tax (but possibly avoiding <59.5 early withdrawal 10% penalty

The point of the "Backdoor Roth" is to avoid annual contribution limits to IRAs, not to avoid tax on pulling money out of untaxed (Traditional) accounts.

Per the IRS topic:
"A conversion to a Roth IRA results in taxation of any untaxed amounts in the traditional IRA."

You can avoid tax from converting Traditional 401k money to Roth IRA if you had added that money to your 401k out of your checking account or something; anything deducted out of payroll pre-tax going into a Traditional 401k is going to get taxed going into a Roth account.

https://www.irs.gov/retirement-plans/retirement-plans-faqs-regarding-iras-rollovers-and-roth-conversions (www.irs.gov)

Responses:

mine's more of a David Lee Roth IRA -- nm - 🦌sleighformojo🛷 Dec 26, 15:05 3
- It rocks but never matures? -- nm - David Dec 26, 15:10 1
  - It wears assless jeans. -- nm - loosilu Dec 26, 15:23
- I thought that was only for people with no dependents. -- nm - Reagen Dec 26, 15:08

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There's no "Traditional Roth" - there's Traditional (IRA/401k), and Roth (IRA/401k) -- (edited)

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