Frozen Sooner
3/6/2006, 05:34 PM
Here's a question:
I have some money sitting in a 401(k) right now. I'm no longer at the employer that sponsored it, and I'd like to pull 8k out for rainy-day money for the new job and roll the rest into another tax-sheltered account.
My thought is this:
Roll money into a conduit Traditional IRA.
Roll money OUT of conduit Traditional IRA to a Roth IRA, avoiding 10% penalty for early withdrawal. Send IRS a honkin' check for taxes due on money.
Withdraw 8k from Roth as principal withdrawals on Roths aren't subject to penalty or tax.
Will this work? Yes? No?
I have some money sitting in a 401(k) right now. I'm no longer at the employer that sponsored it, and I'd like to pull 8k out for rainy-day money for the new job and roll the rest into another tax-sheltered account.
My thought is this:
Roll money into a conduit Traditional IRA.
Roll money OUT of conduit Traditional IRA to a Roth IRA, avoiding 10% penalty for early withdrawal. Send IRS a honkin' check for taxes due on money.
Withdraw 8k from Roth as principal withdrawals on Roths aren't subject to penalty or tax.
Will this work? Yes? No?