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This is legal and effective, but if done repeatedly it will trigger some additional taxes known as the "pro-rata rule." While your 401(k) would incur taxes with each withdrawal made in retirement ...
Beware the pro-rata rule on conversions If you have traditional IRA accounts with deductible contributions, you’ll need to factor that in if you convert any nondeductible amounts into a Roth IRA.
With a 401(k) or similar plan, the workaround is an exemption called “in-service distribution.” If you’re older than 59.5 and still working you can withdraw or rollover money from your 401(k).
Employee contribution limit of $23,000/yr for under 50; $30,500/yr for age 50 or above in 2024; limits are a total of pre-tax Traditional 401(k) and Roth 401(k) contributions. [4] Total employee (including after-tax Traditional 401(k)) and employer combined contributions must be lesser of 100% of employee's salary or $69,000 ($76,500 for age 50 ...
Do note that due to a pro-rata rule, if you have other money inside a Traditional IRA, you might face a higher immediate tax burden on a backdoor Roth IRA than you would on a direct contribution ...
Pro-Rata Rule: If you have other pre-tax IRAs, you may owe taxes on part of the conversion. ... Flexible Withdrawal Rules: You can always withdraw your original contributions tax- and penalty-free ...
The 5-year rule does not apply if the decedent died after having started his/her required minimum distributions (generally if he/she died later than April 1 after reaching age 72 [a]). In that case, there is no 5-year rule, and the beneficiary takes distributions over the length of his/her own life expectancy or the remaining life expectancy ...
(ref. 120 Stat. 988 of the Pension Protection Act of 2006.) The Technical Explanation of H.R.4, of the PPA, Page 156 Vesting Rules, states that the PPA amends both the ERISA and Code. Different rules apply with respect to employer contributions made before 2007. Employee contributions are always 100% vested.