Do you have a Roth 401 (k) at work? Imagine transferring some of your traditional 401 (k) savings to the Roth, referred to as the in-plan Roth conversion.
Note that you, like all direct contributions you make to your Roth 401 (k), any converted amounts before taxes are added to your income and are subject to tax.
"Participants would be responsible for taxes on capital gains before tax and profit, which could be a very large tax bill," said Jana Steele, Senior Vice President of Defined Contribution, Callan.
This increase in income can be dangerous for savers. In the worst case, this can lead to a higher tax code.
Consider converting the dollars into shares before taxes to avoid a sharp rise in income and taxes, Slott said.
Financial Advisor or Accountant before moving on.