Rollover old 401k to Roth IRA?

[Music] hey Dustin Tibbets here financial adviser with jazz wealth managers I hope you'll check us out jazz wealth managers calm we manage retirement investments for individuals but we're laid-back about it we don't do the typical suit and tie thing we actually built a TV studio here instead of an office so that we could teach our customers really like doing that and one of the things I want to teach you guys today I know I've done a video on this in the past but we need to talk we got to talk again here all right look I get this question a lot I have an old 401k rollover I would like it to be rolled over and I say well thank you thanks for choosing jazz wealth is really exciting we're gonna go through this whole process with you I'm very very excited then they say I would like to roll it over from the 401k to the Roth IRA I get it very attractive vehicle right you know your taxes out of the way you don't know if taxes on the growth and everything in the future it's tax-free yay so can you do that though you can but here's we can just hang with me we got we got to do this here in particular so you can't actually just roll it directly over so let's say you've got a 401 K right and you want to roll this over you no longer work at the job you have to quit be fired or retire to be over the age of 59 if you want to roll it over right and still work there so the 401 K has to go into what's known as a rollover IRA is a traditional IRA it's just a word that we use to to say that it's rolled over so let's call this a rollover IRA that's the first step got to do this right and you know what's funny is I don't know if anybody would stop you from this this this is actually an interesting question if you just tried to rollover your 401k to a Roth IRA I'm not sure that any online company would stop you from doing that and then you would owe taxes on everything but here's the process if you do it with me I'm gonna stop you because the pre-tax money has to go into a pre-tax account now you know that a traditional IRA is all pre-tax money you're gonna pay that tax in the future if you have a Roth 401k very popular these days right that money has to and by the way this applies to for three B's things like that as well if you happen to have those so I'm using 401k today but you can switch out the numbers this money goes into a Roth IRA because it's already post tax money so it has to go into the same account there so here you haven't paid any tax has to go into an account that you haven't paid any tax on over here the Roth 401k money that's after tax money came out of your paycheck at your job there that can go into a Roth IRA if you would like the 401k money to go into the Roth IRA you just have to start this step it's gonna go like this very simply that's your process now when you do this part if you now what's called convert your rollover IRA to a Roth IRA you will owe taxes on the amount it gets counted as income right so be very careful here if you roll over a thousand dollars it's probably not gonna make a big deal nobody's really gonna care you add the thousand dollars so your income you're not gonna notice it if you have a $50,000 ir 401k and you try to go to the Roth IRA directly like I said I don't think these brokerage firms would actually stop you from doing that I'm not sure anybody's gonna call you and say hey do you know what you're doing here I think they would just let it happen so you want to go into the rollover IRA first then convert to the Roth here's the kicker though you don't have to do it all in one right let's say you have a $50,000 old 401k somewhere and you realize that 20,000 extra dollars you could add to your income and not go into the next tax bracket well you can actually convert part of your IRA in one year convert the other part in the other you don't have to go all or none on this the moral of today's story is the pre-tax money goes into a pre-tax account post tax money goes into a post tax account and actually if you have both of those they're going to send two checks there's going to be one check that they won't even tell you which one is it you just gotta know which one it is they'll have one check which you're supposed to know goes in that one you have the other check which you're supposed to know goes in that one there they won't send you the money as a whole they will they will separate it when they do the rollover so that's the starting point that middle area there if you decide to convert that's the key word there then you you pay the taxes right you got to make sure you're willing to pay the taxes you also don't take the money out to pay the taxes right you can't do that a lot of people say should I convert when I have the money in my bank account or should I convert when I just want to pull the money out if you try to take money out when you convert to the Roth IRA to pay taxes that money is going to be penalized as well so you have to do the conversion when you have the dollars to pay the tax in your savings account your checking account or whatever it may be so I just want to point that out it's a relatively straightforward video today but I get that question just tons of times a week and so I thought well let's make a video about this try to help people out a little bit I hope it helped you and if it did maybe you'll hit the subscribe button or hit the thumbs up button if it did if you happen to have done this and got caught or got in trouble maybe owed more money than you thought leave a comment below help everybody else out so that we understand what the correct process is and maybe if you have a horror story to share and you're willing to share that with us as well hey you enjoy the rest of your day will be back again to do this and later at we're closing beat show 5 o'clock every day live on our YouTube channel jazz wealth managers hope you check us out there and thank you so much for watching why should you choose jazz wealth as your retirement or long-term investing service our portfolios are managed by us not some faceless mutual fund manager our private classes will teach you everything about investing and getting your dough straight best of all our fiduciary standard means your best interests comes before ours [Music]

Channel: Jazz Wealth Managers

Views: 46,671

Keywords: 401k rollover to roth ira, 401k rollover options, roth ira, 401k rollover, traditional ira, how to rollover your 401k into an ira, how to rollover a 401k into a roth ira, 401k investing, 401k investing for beginners, roth 401k vs 401k, roth 401k vs roth ira, roth 401k vs traditional 401 k

Id: qjCGyYF7X7k

Length: 6min 3sec (363 seconds)

Published: Fri Mar 06 2020