Originally Posted by
TalkTurkey
Copy that. So non-vested is lost. That’s understood. When I rolled over my money, I got no bill of any sort. I know when I retire, the initial rollover amount as reported to IRS will be taxed at my applicable rate. That’s understood. But that money, since rolled into an IRA has been invested many times over and has produced a lot more value in gains and dividends which in an IRA are not taxable.
So let’s say I rolled over that 10k and will await the 2500 tax bill. That 10k has multiplied a few times over in my IRA and all I have to pay is that measly 2500. Sold.
Again, I don't disagree that a) rolling out of your former employer's plan and b) converting a traditional (tax deferred) 401k or IRA to a Roth IRA makes good sense for many (certainly everyone under 30 but even up to 50). I'm simply providing clarification that if you convert to a Roth then you create a tax bill in the year of conversion.
As always tax bills and credits are net over a year, so if you converted a 401k to a Roth TalkTurkey it's possible that you net your conversion tax against what would have been a refund from overwithholding that year.
Just something for guys to consider. That tax bill cannot be deferred without penalties and interest from the IRS. You will pay the tax in the year of conversion.
If you're clever in your tax planning the best years to convert would be low income years (whether that's a year your wife doesn't work, or a year that you train).
As you mentioned, consult a paid CPA for the best advice.