A friend of mine recently had a ~$5000 401k rolled over into her traditional IRA, and she's going to convert it to her Roth iRA. This has me wondering...
Can you effectively contribute beyond the standard $7000 dollars to a Roth IRA using this method?
- Have a job that has a 401k.
- Contribute the maximum $22,500 to your 401k. Let's say we do this for 5 years
- Leave the job and have the $112,500 rolled over into a traditional IRA
- convert the $112,500 from traditional IRA to traditional IRA
- Congratulations, you just put $112,500 into your Roth IRA over 5 years?
Obviously this would come with a hefty tax burden in the year you convert over $100,000 into your Roth IRA, but I'm mostly just wondering if this is even legal? Isn't this a fairly easy way to get around the $7000 limit?
Unfortunately, I'm self-employed, so this strategy wouldn't apply to me if it was indeed legal, but I'm kind of just dying to know how this would work
Submitted January 09, 2024 at 12:20AM by kirazykid https://ift.tt/pezGLi2
