How to Transfer a 401(k) to a Roth

You will owe taxes when you convert to a Roth.
You will owe taxes when you convert to a Roth. (Image: Jeffrey Hamilton/Digital Vision/Getty Images)

The Roth IRA option has proven to be a popular one with workers saving for retirement. The success of the Roth IRA program has prompted the creation of a Roth 401(k) option as well. While the Roth 401(k) option is still relatively new, a growing number of companies are offering this new benefit to their employees. If the company you work for has a Roth 401(k) option available, you might be able to convert part of your existing 401(k) to the Roth equivalent. With a Roth 401(k), workers invest post-tax income, but the withdrawals they make in retirement are tax-free.

Things You'll Need

  • 401(k) statement
  • Roth 401(k) enrollment form

Contact the human resources department at the company where you work. Ask if there is a Roth 401(k) program in place. You can only make the conversion if your company offers the Roth 401(k) option.

Make sure you meet the requirements for the conversion. You are eligible to make the conversion if you are age 59 1/2 or older, if you have participated in the plan for at least five years, or if you have had the money in the workplace plan for at least two years.

Consult with an accountant or tax expert to determine the tax implications of the conversion. If you choose to convert some or all of your 401(k) plan to a Roth 401(k), you will owe taxes on the money converted, since those funds were previously untaxed.

Review your latest 401(k) statement and determine how much of the balance you want to convert. You can convert as much as you wish to a Roth, but you owe taxes on that money.

Contact your employer and get the paperwork you will need to make the conversion. Fill out the paperwork completely, including your name, Social Security number and 401(k) account number. Be sure to keep copies of all paperwork for your records. You will need this documentation when you file your taxes.

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