[USER]

I want to roll over my traditional 401k from my old job to my new Vanguard Roth IRA will there be and advantages and disadvantages or any tax implications if I do that?

The money is not a lot around $17k but I want to start somewhere please no judgement.

Thank you..

[Angelo]

You’d have to pay taxes on the entire amount. Alternatively, you could roll ot to a traditional IRA and not pay any taxes until retirement age.

[Michael]

Move a traditional 401k balance to a traditional IRA (not Roth IRA) in order to avoid a taxable event. Converting traditional funds to Roth can be done at anytime but would be a taxable event so best to convert during low earning years (12% federal tax bracket while living in a state with 0% income tax) like the years after early retirement but prior to collecting SS at age 70.

Advantages of leaving money in a 401k instead of moving to an IRA include (1) enable rule of 55 withdrawals, (2) better protection from judgements, and (3) enabling backdoor Roth IRA contributions without pro-rata tax payments.

[Author]

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