401K Rollover

Are you curious how to make an IRA to 401k rollover? The process of rolling a traditional IRA into a Roth IRA has been around for quite some time, and is usually fairly simple. If you’ve looked at any financial publications or talked to any financial advisors, you’ve probably heard of all the different ways to make money and save for retirement. Whether it be investing in real estate, stocks, mutual funds, or even rollovers of IRA’s, each of these options has their place.

After-tax Contribution Planning

One of the easiest and least stressful ways to get started with the process of converting your IRA into a Roth IRA is to simply take a look at your paperwork. If you have a traditional IRA, the process of conversion is pretty easy. You simply need to list the type of account you’re already contributing to on your taxes, and then list your 401k as one of your income sources. If retirement is within the future ( Congratulations! ), then the easiest way to convert your traditional IRA contributions into Roth IRA contributions is simply rolling the entire 401k over to a traditional IRA.


Now, if you are looking at a rollover plan for a traditional IRA, you’ll be looking for one of two different forms of IRA to 401k rollover: the “cash-or-nothing” option and the “contingent upon” option. The “cash-or-nothing” option involves withdrawing all of your contributions before retirement and then just stopping tax deductions and capital gains taxes from happening. The “contingent upon” option means that you will only be able to take withdrawals upon certain events. Both rollovers can be done at any time throughout the life of the account, so both require a little research and thought to be handled before making your decision.

Reverse rollover

If you are considering an IRA to 401k reverse rollover, the first thing to do is look up the relevant forms to filing your tax return. Most financial institutions will have forms for this, as well as instructions for how to complete them. You can file electronically or mail in paper forms depending on your preference and your financial status. You’ll want to make sure that the rollover is actually tax-free, though – that’s a big part of the appeal to this type of IRA.

Tax Penalties

If you think you may have to deal with a hefty tax penalty right away, you should know that the IRS has a rule that states that you cannot contribute to an IRA during a penalty period. The length of this “penalty” varies greatly, but it can last from sixty days to a few years. Knowing the exact length of this “penalty” before deciding whether or not to roll your IRA over to a Roth IRA can save you a lot of headaches in the future. This “penalty” only applies if you choose a traditional IRA and plan to contribute to it within the penalty period; if you roll over to a Roth you won’t owe any taxes on the Roth portion of your contribution at all.

Contributing to Your Plan

Once you’ve determined when you’ll be able to contribute to your IRA and what you’ll need in order to contribute during the penalty period, you’ll also need to decide how you’re going to pay for your withdrawals during that time. There are two main ways that people do this, with differing consequences. One option is to take cash out right away, either by withdrawing the entire amount of their IRA funds or by rolling over their 401k plan into an IRA account that accepts larger deposits. Another option is to allow your income and total assets to increase each year, which would allow you to take larger withdrawals and build a larger emergency fund. Both options have their pros and cons, so it’s important to make sure you’re working with a professional consultant that knows which plan is right for you and your needs.