Withdrawals from government retirement funded IRA | Ed Slott and Company, LLC

Withdrawals from government retirement funded IRA

I'm seeking information about the process of withdrawing funds from an IRA (comprised of funds transferred from a government 401a plan) and using proceeds to contribute to a Roth IRA.

1) First, what is the correct process to withdraw funds from an IRA prior to age 70 1/2 and contribute proceeds to a Roth IRA?

2) What impact will those withdrawls have on future Social Security benefits due to WEP reductions? For example, are there retroactive reductions for withdrawls made at ages 67 through 70 or are reductions only implemented after Social Security benefits start?

Thank you

  1. While you can do a Roth conversion as traitional IRA withdrawal followed by a Roth rollover within 60 days. The latter is not a contribution subject to the contribution limit. You are far better off doing a direct Roth conversion preferrably at the same custodian.
  2. The taxable portion (pre-tax assets) is taxable income in the year of the conversion.
  3. This IRA taxable income has no future impact on SS benefits. Even in the current year; IRA distributions and those from definined contribution plans (401k, 403b, 457, etc...) are not involved in an WEP calculation. Only benefits from defined benefit plans are involved in any WEP calculation.
  4. Be aware that increased AGI/MAGI from Roth Conversions can result in additional Medicare Part B and Part D IRMAA premiums.  

Find members of Ed Slott's Elite IRA Advisor GroupSM in your area.
We neither keep nor share your information entered on this form.

I agree to the terms and services:

You may review the terms and conditions here.