The Flanigan Law Group, A Professional Corporation
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Are You The Parent Of An Orphan 401(k)?

It is estimated that 15 million Americans have left a 401(k) behind with a former employer. Which means there are 15 million opportunities for Americans to save on their taxes by reclaiming that orphan 401(k) and rolling it over into a Roth IRA.

In addition, if your current employer's 401(k) plan allows you to make in-service rollovers, you can do the same. And if you are over the age of 59 ½, you can roll all your money over from your current employer's 401(k) to a Roth IRA without penalty.

Rolling a 401(k) over to a Roth IRA is the same as rolling over a traditional IRA: the old account is declared taxable with taxes paid on pretax contributions and earnings; the rest goes into the Roth IRA, where future growth is tax-free.

But here's where converting 401(k)s provides a better tax break than converting traditional IRAs: when converting your 401(k) into a Roth IRA, you can disregard your other IRAs and 401(k)s when determining what percentage of the conversion is taxable. IRS rules say that if you own several IRAs and want to convert just a portion of the total, that amount must be drawn proportionately from pretax and after-tax dollars in all the IRAs.

If you earn more than $250,000 annually and are thinking about converting a 401(k) to a Roth IRA, better do it before taxes go up for your income bracket.

The Flanigan Law Group provides Southern California residents with personal attention for estate planning, administration and litigation legal services. When disputes between families, arise, they are very successful in resolving legal estate issues quickly and efficiently while preserving financial and emotional resources. Contact the Flanigan Law Group at 949-450-0041.

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The Flanigan Law Group, A Professional Corporation

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