[Tiah]

Quick question that I can’t seem to find the direct answer to.

I have an old 401k from an employer that I wasn’t with very long that has about $2k in it. My question is, if I roll that over into Roth IRA, does that $2k go towards my “maximum” amount that I can contribute for the year.

Ex: If the Roth IRA only allows me to contribute $6500 for this year, after I roll over the $2k, will I only be able to contribute $4500 for the remainder of the year?

Thanks for any help!

[Michelle]

No, a rollover is a contribution from a previous year and has no bearing on your limit. So, you can roll it over and still contribute the full $6,500 this year.

[Jennifer]

I should add its best to have your new institution request the transfer directly from your 401k plan. The only time I’ve seen someone run into a problem is if the distribution and deposit are not coded correctly to reflect it’s a rollover.

The easiest way to avoid this situation is by completing a trustee to trustee transfer where you never physically handle the funds.

Take a peek at: Maximizing Investments: Utilizing ESPP for Roth IRA Contributions

[Megan]

If you are rolling over from a Traditional 401k you would roll into a Rollover (traditional) IRA not to a Roth IRA, though you could later decide to do a Roth IRA conversion.

Rollovers are not contributions.

[Jennifer]

No it will not impact your contribution limit. The limit will still be $6,500 for 2023.

[Sean]

Neither a conversion nor rollover count as a contribution.

You will have to pay tax on the entire amount you convert unless it’s coming from a Roth 401k.

Don’t miss: Maxed 401k, start index funds: 1 per pay period, Fidelity, DIY or advisor? Good strategy? Recommended funds?

[Cheryl]

If it tradition 401 usually it rolls into traditional IRA or you will have taxes to pay. It doesn’t count towards contribution limits typically since it rollover.

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