401(k) Balances into Roth

[fiona1]

Has anyone heard of an option that starting in 2010, plan participants would be able to convert all or part of their 401(k) balances into the Roth portion of their plans. I've been told it will be most beneficial for participants, who have saved enough money to cover the additional taxes that will be generated by this transfer. But I don't remember seeing anything about this.

[JanetM]

No I haven't heard that you can can convert to ROTH inside the 401k plan.

The new rules on Roth starting in 2010 is the income limits for converting/contributing to Roth are eliminated. Person could take inservice w/d from K plan to IRA and then convert to Roth.

[GMK]

And didn't I hear that the tax cuts expire in 2010, so although your income level won't prevent you from converting to a Roth, you'll pay a lot more taxes on the dollars you converted to the Roth. Or is this just a rumor?

[JanetM]

Cuts are supposed to expire 12/31/10. Obama and McCain both have plans that sort of extend many of the cuts. If I have kept up with all the changes both candidates have made to platforms I think if Obama wins his basic plan is to extend cuts for only those whose income is under $250k and McCain will extend almost all the cuts as they are. (I don't know if the $250 is for MFJ or Single filing)

[K2retire]

No I haven't heard that you can can convert to ROTH inside the 401k plan.

The new rules on Roth starting in 2010 is the income limits for converting/contributing to Roth are eliminated. Person could take inservice w/d from K plan to IRA and then convert to Roth.

Actually, you don't have to convert anymore. You can go directly from the 401(k) to the Roth IRA now.

[JanetM]

Not if you income exceeds the cap now. You can convert to traditional now and when income limits go away you can convert to Roth.