I am new to this forum and have been reading the Q & A's with much interest.
I am a Canadian citizen. I lived in the US for several years and was a Green Card holder. I recently moved back to Canada and plan to live here permanently.
I contacted Fidelity today regarding my 401 K and asked that they roll it over to a Roth IRA. They suggested I do a Roll over IRA to avoid taxes. I am 49 years of age and plan to keep the money there until I am 59 1/2.
What is the difference between a roll over and a Roth?
Is the roll over the best option?
Thanks!
401 K Rollover vs Roth IRA
Moderator: Mark T Serbinski CA CPA
Read all prior posts on this subject say over teh last week there was a lot of discussion on this area with very good pointers.
In Summary
A rollover from a 401(k) to a Roth IRA should have been done while you were still a resident of the US, a direct rollover ( Trustee to Trustee) was the way to go this way no tax or 10% penalty would be levied and you would pay the tax at year end filing of your 1040. If you did not elect a rollover the 401(k) would be cashed and 30% held back from the proceeds to be then redeposited by you into a Roth .
Also by doing the rollover or even direct deposit to teh Roth while ytou were resident of the US the Roth remaines tax free in the US and Canada for life, by waiting to do this when you came back to Canada you violated teh treaty and the Roth is now taxable in Canada too.
If you can get the rollover done before you move back officially to Canada if not you will pay more tax now by doing so.
In Summary
A rollover from a 401(k) to a Roth IRA should have been done while you were still a resident of the US, a direct rollover ( Trustee to Trustee) was the way to go this way no tax or 10% penalty would be levied and you would pay the tax at year end filing of your 1040. If you did not elect a rollover the 401(k) would be cashed and 30% held back from the proceeds to be then redeposited by you into a Roth .
Also by doing the rollover or even direct deposit to teh Roth while ytou were resident of the US the Roth remaines tax free in the US and Canada for life, by waiting to do this when you came back to Canada you violated teh treaty and the Roth is now taxable in Canada too.
If you can get the rollover done before you move back officially to Canada if not you will pay more tax now by doing so.
JG
WHOA!!!!
Now that you have moved back to canada DO NOT ROLL OVER TO ROTH!!!
It is too late for you to do that.
Leave it in an IRA (rollover to IRA), and take it out slowly as retirement income when the time comes.
ou should have come here BEFORE you left US
Now that you have moved back to canada DO NOT ROLL OVER TO ROTH!!!
It is too late for you to do that.
Leave it in an IRA (rollover to IRA), and take it out slowly as retirement income when the time comes.
ou should have come here BEFORE you left US
After 20 years, I am severely cutting back on responses. Do not ask specifically for my help. There are a few others on this board that can answer most questions. All the best