I am changing second jobs and so I want to roll over my 401k (about $4000) from the previous job to a Traditional IRA at my current broker. I also have about $1500 in current stock that I want to put into my IRA.
Assuming I want to stay with a traditional IRA:
Assuming the rollover and putting the existing stock in the account occurs this year, How much more can I contribute in 2017?
What are the tax implications for putting in stock that I bought post-tax?
How can I arrange for money from my paycheck to be put in to my IRA pretax?
Suppose I convert the Traditional IRA i.e. the $4000 rollover to a Roth IRA. I’m pretty sure there is no 10% penalty but I will have to pay about $1200 in taxes.
How much more can I contribute in 2017?
I’m looking at a Roth IRA since I will get a decent teacher’s pension at 65 (though I lose my Social Security because of the offset) and I expect about $75,000 or more in gains from the IRA and I’m thinking of taking the IRA out at age 60 while still working as a lump-sum to pay off the house.
Why would I want to go Traditional rather than Roth for this?
You can’t make in kind contributions to an IRA, you have to contribute in cash.
As to how much you can contribute, the rollover doesn’t affect your limit, but if you worked for an employer with a retirement plan at work this year it changes the income limits for deductibility. So how much can you contribute this year is $5500 in cash, but how much can you deduct depends on your income.
It would be simpler to roll over your 401K to a traditional IRA and then contribute directly to a new Roth IRA instead of a conversion at those small $ levels. Plus the income limit for roth IRA when you have a retirement plan at work is much higher than the income limit for tax deductibility of a traditional IRA.
Try and see if you can rollover your employer-sponsored 401(k) into a self-directed 401(k). That way you can add to your IRA independent of the 401(k).