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How to Roll Over a Roth 401(k)

I have access to a traditional and a Roth 401(k). How much can I contribute to each, and will there be tax issues if I roll the money into an IRA? --Todd Donohue, Potomac Falls, Va.

You can split the traditional and Roth contributions to the 401(k) any way you choose, as long as you don't exceed the $17,500 annual limit ($23,000 if you're 50 or older). Traditional 401(k) contributions are pretax, and the withdrawals are taxable. You pay taxes on Roth 401(k) contributions, but withdrawals are tax-free in retirement. Because of the different tax treatment, you should roll the traditional 401(k) money into a traditional IRA and the Roth money into a Roth IRA. "That will make record keeping a whole lot easier," says Stuart Ritter, a certified financial planner with T. Rowe Price.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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