Roth IRA Rollover Rules

A Roth IRA rollover is when you move your funds in a qualified retirement account, such as a 401k or traditional IRA, into a Roth IRA. The advantage of converting your money to a Roth IRA is that it will be taxed when you roll it over and not when you withdraw funds from it. This means that, in essence, a dollar in a Roth IRA is worth more than a dollar in a traditional IRA. Additionally, the compounded interest is tax-free and there are no withdraw requirements, so you can keep your money in the account and get tax-free interest longer.

Qualified Acounts

The following accounts can be rolled over in addition to a tradition IRA: pensions, profit sharing, stock bonus plans, annuity plans, tax sheltered annuity plans or deferred compensation plans. All rollovers follow the same rules as for tradition IRAs.

Filing Status

If you filed taxes as married filing separately, you must have been living apart from your spouse for at least a year to qualify for a rollover.

Income

Your modified adjusted gross income (MAGI) cannot be greater than $100,000 to qualify for a rollover.

Partial Conversion

You may convert only part of a traditional IRA to a Roth IRA, but it cannot include only the tax-free portion.

Inherited IRA

You cannot rollover a traditional IRA you've inherited from anyone other than your spouse.