401K TO A ROTH IRA

[Guest tim22]

I am changing jobs in the near future and I was wanting to know if I can transfer my 401k into a roth ira. Also, if I was going to purchase my 1st home down the road if I could use money from the roth ira and if i did how much of a penalty would I receive. Any advise would be appreciated. THANKS

[pmacduff]

As far as I know, you cannot transfer from a Qualified 401(k) Plan directly to a Roth IRA. I've mostly seen the 401(k) balance transferred to a traditional IRA and then out to the Roth. Roth IRAs are funded with after tax $ and since the 401(k) monies have not yet been taxed, somewhere along the line you need to pay the tax....

[Appleby]

I agree.

Assets from a qualified plan, including 401(k) plans, must first be rolled to a traditional IRA before the assets can be converted to a Roth IRA. The conversion occurs between the traditional IRA and the Roth IRA.

If you distribute assets from your Roth IRA to be used towards the purchase, building, rebuilding of the first home of a qualifying individual, the penalty is waived.

See the following URLs for other discussions on the taxation of Roth IRA distributions

http://benefitslink.com/boards/index.php?showtopic=19386

http://benefitslink.com/boards/index.php?showtopic=21918

http://benefitslink.com/boards/index.php?showtopic=22114

[Guest tim22]

Thanks for the help!