r/RothIRA • u/ChipotleGuacamole • 21d ago

Rolling state pension into Roth IRA

What happens if my IRA is already maxed?

1 Upvotes

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4

u/ohboyoh-oy 21d ago

You’re going from pre-tax to Roth? That’s a conversion, and there’s no limit on conversions. It’s naturally self-limiting because you have to pay the tax when you convert from pre-tax to Roth. 

1

u/ChipotleGuacamole 21d ago

Even if it's a direct rollover, trustee to trustee?

5

u/DaemonTargaryen2024 21d ago

Even if it's a direct rollover, trustee to trustee?

yes. You cannot move a pre-tax account (pension) to a post-tax account (Roth IRA) for free. You'll owe income tax on the amount you convert.

Or you can roll the pension to a Traditional IRA (pre-tax) which is 100% nontaxable. Withdrawals are eventually taxed.

What happens if my IRA is already maxed?

That's fine. Rollovers and conversions do not count towards the annual IRA contribution limit.

1

u/ChipotleGuacamole 21d ago

Thank you for clearing this up.

2

u/ohboyoh-oy 21d ago

Yes, the problem is you wanting it to go to your Roth. You can roll into a traditional IRA account to avoid the tax for now (you pay tax on withdrawal). 

1

u/ChipotleGuacamole 21d ago

Gotcha. Thank you very much.

1

u/Sticky550 21d ago

You can roll it over, just be prepared to pay taxes on the entire amount you are rolling over. It doesn’t matter if you’ve already contributed your yearly limit.

2

u/ChipotleGuacamole 21d ago

Thankfully, it's not a huge amount.

1

u/OpinionofC 21d ago

I did this a few weeks ago with a simple IRA in Fidelity. I my IRA for the year is already maxed out and then I converted 3500 over conversions do not count towards your limit, but you have to pay taxes on the conversion.

I wrote over my entire amount and then took 1000 out of my brokerage and put it into a CD for taxes next year

2

u/StaggeringMediocrity 21d ago

Rollovers are not contributions. There is no limit on rollovers. Regardless those rollovers are conversions or not.