• Set Yourself Up For Success Webinar

    October 6, 2021 at 2 PM Eastern/11 AM Pacific
    SDN and Osmosis are teaming up to help you get set up for success this school year! We'll be covering study tips, healthy habits, and meeting mentors.

    Register Now!

  • Funniest Story on the Job Contest Starts Now!

    Contest starts now and ends September 27th. Winner will receive a special user banner and $10 Amazon Gift card!

    JOIN NOW
  • Site Updates Coming Next Week

    Site updates are coming next week on Monday, Wednesday, and Friday. Click the button below to learn more!

    LEARN MORE

Rollover of personal 401(k) to a Roth for the first year of work

The PA Investor

Full Member
Jan 21, 2020
28
9
11
I just started a new job and get paid with 1099. I was thinking of opening up a 401(k) and contributing the max I can as a sole proprietor. Since I'm a new grad and will only be working half the year, I thought it would be a good time to roll that over to a Roth IRA and pay the taxes on it since I'll be in a lower tax bracket this year. Any thoughts about this would be great. Thank you.
 

RangerBob

Full Member
7+ Year Member
Sep 16, 2012
1,726
2,176
226
  1. Attending Physician
You can contribute directly to a Roth IRA if you’re under the income limit. If you do a rollover you usually do it from another IRA

Many individual 401k plans allow Roth contributions, like Vanguard. I have my solo 401k with them, so I have a traditional and a Roth 401k. Plus I have my Roth IRA with them as well, but I make too much to contribute directly to that anymore
 
  • Like
Reactions: 1 user

FutureInternist

Probationary Status
10+ Year Member
Aug 24, 2007
1,895
1,080
276
Where Bugs Bunny should have made a left turn
  1. Attending Physician
You can contribute directly to a Roth IRA if you’re under the income limit. If you do a rollover you usually do it from another IRA

Many individual 401k plans allow Roth contributions, like Vanguard. I have my solo 401k with them, so I have a traditional and a Roth 401k. Plus I have my Roth IRA with them as well, but I make too much to contribute directly to that anymore

My understanding is that despite the income limitations you can still make contributions to an IRA as a “backdoor Roth IRA”.

Make the usual contribution to an IRA and then “convert” it to a Roth IRA a day later.
 
About the Ads

ThoracicGuy

Full Member
7+ Year Member
Jun 11, 2013
10,954
26,161
226
  1. Attending Physician
I just started a new job and get paid with 1099. I was thinking of opening up a 401(k) and contributing the max I can as a sole proprietor. Since I'm a new grad and will only be working half the year, I thought it would be a good time to roll that over to a Roth IRA and pay the taxes on it since I'll be in a lower tax bracket this year. Any thoughts about this would be great. Thank you.

I would open the solo 401k and then KEEP it open. Use it to move any traditional IRA monies to hide from the pro rata rule for the Backdoor Roth if that applies to you. Plus, you never know when you may get 1099 money and be able to contribute, even if you have a W2 job in the future. You can find solo 401k plans that have a Roth option as well, as @dpmd said.

(And yes, I know this reply is about a month old!)
 
  • Like
Reactions: 1 user
About the Ads
This thread is more than 1 year old.

Your message may be considered spam for the following reasons:

  1. Your new thread title is very short, and likely is unhelpful.
  2. Your reply is very short and likely does not add anything to the thread.
  3. Your reply is very long and likely does not add anything to the thread.
  4. It is very likely that it does not need any further discussion and thus bumping it serves no purpose.
  5. Your message is mostly quotes or spoilers.
  6. Your reply has occurred very quickly after a previous reply and likely does not add anything to the thread.
  7. This thread is locked.