Details of a 401k to Roth IRA Rollover

Converting a 401k to Roth IRA is a popular choice for many retirement savers today. Since the Roth IRA has not been around forever, many people are just now discovering the benefits that it provides. In order to convert from the 401k to Roth IRA, you will need to take a few different steps.

Open a Roth IRA

Start out by opening a Roth IRA with a financial broker. You should be able to find many different Roth IRA options with nearly every financial broker out there. You will have to do some basic paperwork in order to open the account. Notify them that you will be rolling over funds from a 401k into the account. They will most likely have a special form for you to fill out in this case.

Contact Your 401k Provider

You will then need to contact your 401k provider and let them know that you are converting to a Roth IRA. You will have to fill out a transfer form with the new account information. They will then get the process started and administer the rollover in conjunction with your IRA provider.

Taxes

Since you are going from a pretax account to an after-tax account, you will need to pay the taxes on the money that you are transferring. You can spread the taxes out over three years if you choose to do so.

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