When I retired 12 years ago I converted my work 401k to an IRA. This past year I converted $50,000 to a Roth IRA for the first time. How do I figure the taxable amount? My contributions to the 401k were all post-tax.
there are some great resources online - probably better than folks here. Post tax and pretax terms are often used incorrectly. Money put into 401k is not taxed until you take it out. It is always taxable, just deferred while it sits in IRA. If you took $50k out of IRA, it is then taxable. Check this out > https://www.investopedia.com/roth-ira-conversion-rules-4770480
How were your contributions to your 401k "post-tax"? Did you contribute it to a Roth 401k? Did you have to pay taxes when your 401k was converted to an IRA from your work? I would assume there would be no tax consequence if you convert a post-tax investment vehicle into a Roth, which is also funded post-tax...but would ultimately defer to a tax-attorney.
My mistake It's been a dozen years and I forgot what i did and what the rules were. I had both a 401k and a Roth while I was still working.
You'd have to look. if you converted 50k of pre-tax money to post-tax, all of it will hit you as income this year. This is normally what I hear when someone says they converted X to a Roth. This is my guess at what you did. Now, if you had both pre and post tax assets in your 401(k), it's possible I guess that they moved a pro-rata share of each balance. You should be able to tell from the asset statements if you had a Roth subaccount, as your 401(k) vendor would individually track that. You should also be able to see the amount transferred out of the pre-tax and post-tax subaccounts if this were the case.
If your 401k was converted to a traditional IRA after your retirement (both pre-tax), I would assume there would be tax consequences if you convert your Traditional to a Roth.
During this current downturn is a darn good time to do a conversion to a Roth. Thinking about doing similar myself.
Took me a minute to figure out why this would be good time. Then I think I figure it out. If you $100,000 is now $80,000, then you can move it over and pay taxes on a lower amount. Then it can grow back up in the new Roth account and not pay taxes on that growth. Do I have that right? https://www.investopedia.com/how-roth-ira-taxes-work-4769988
That will only account for the state tax, not the federal tax so your savings will likely be offset (and then some) by "establishing your residency" but it would certainly be worth a look.
and as one could surely assume, you can't emigrate from CA to a non income tax state and avoid paying CA deferred state income tax. allegedly they [CA] pursues this.
