Types of Rollovers

IRA Rollover, 401k Rollover, Roth Conversion, Reverse Rollover

Rollovers

• 401k Rollover: transferring (inactive) traditional 401k to traditional/Rollover IRA. It could be relevant when leaving a job.
• A rollover from Roth 401k to Roth IRA: it’s similar to the previous case but applies to Roth 401k.
• IRA Rollover: transferring one IRA to another of the same type (traditional/Rollover/SEP/SIMPLE IRA to IRA, or Roth IRA to Roth IRA).
• A rollover from 401k to 401k: rolling over the old 401k to the new 401k (of the same type).

In all these cases, there are no tax implications if a rollover is done correctly (trustee-to-trustee direct transfer).

The first contribution to Roth IRA starts the 5-year clock. Withdrawals of earnings from Roth IRA are tax-free if two conditions hold: your reached 59.5 years old and the 5-year clock ended.

Each Roth 401k account has its 5-year clock. Note that transferring a Roth 401k to a Roth IRA starts a new 5-year clock unless, in the past, you made contributions to any Roth IRA.

Roth Conversions

• A rollover from IRA to Roth IRA: Roth Conversion adds pre-tax money to taxable income (taxed). Such a transfer…