If I invest this year in a traditional 401k, as I understand it, I can then convert it to a roth 401k at a later date.
My questions are:
I'm looking into this is because I'm thinking about becoming a stay at home parent. I want to get the tax benefits from contributing to a traditional 401k while I'm employed, and I also want to be taxed less when I eventually convert to a roth 401k.
Ultimately, I want a roth 401k. The decision for me is whether I go traditional and convert to roth, or go roth right from day one.
My questions are:
- When I convert to Roth, will I be paying tax based on the tax bracket I'm in when I do the conversion? So if I'm unemployed when I convert, do I pay less tax on the Roth than if I were to open a Roth while employed?
- Are there typically any fees associated with converting?
- Is there a time limit? or can I convert at any time?
I'm looking into this is because I'm thinking about becoming a stay at home parent. I want to get the tax benefits from contributing to a traditional 401k while I'm employed, and I also want to be taxed less when I eventually convert to a roth 401k.
Ultimately, I want a roth 401k. The decision for me is whether I go traditional and convert to roth, or go roth right from day one.
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