Traditional 401K to Roth IRA conversion
I understand that the IRS allows a 401K participant to convert their funds by rolling directly from the 401K to a Roth IRA. However, does this transaction result in mandatory 20% tax withholding? I know that direct rollovers to Traditional IRAs do not have mandatory withholding, but what about direct rollovers to Roth IRAs?
Thank you!
Permalink Submitted by Alan - IRA critic on Wed, 2020-07-29 21:02
There is no mandatory 20% withholding on a direct transfer (direct rollover) to an eligible retirement plan per Sec 401(a)(31)(A), which includes the type of rollover you indicated.