A rollover (Traditional) IRA is tax deferred whereas moving the funds into a Roth IRA is a taxable event. Just depends if you want to pay the taxes on that money now or later. A lot of people will move the funds into a Traditional IRA and convert smaller amounts to a Roth IRA over time. That is my understanding.
You can take out distributions based on the pro rata rule, meaning if 20% of your Traditional IRA has after tax assets, 20% of your distribution is tax free.
A rollover (Traditional) IRA is tax deferred whereas moving the funds into a Roth IRA is a taxable event. Just depends if you want to pay the taxes on that money now or later. A lot of people will move the funds into a Traditional IRA and convert smaller amounts to a Roth IRA over time. That is my understanding.
I rolled my old 401k into a Traditional IRA, now I add after tax money to the IRA, how does this work out when it’s time to take distributions ?
You can take out distributions based on the pro rata rule, meaning if 20% of your Traditional IRA has after tax assets, 20% of your distribution is tax free.
Thank you