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In-Plan Roth Conversion A Good Retirement Tool

Posted 12/20/21

Q.: Over lunch the other day, a co-worker mentioned that he was converting money from his pre-tax 457(b) account to his Roth 457(b) account. This is all new to me. Can you clarify? S.C.

A.: Your colleague is referring to an In-Plan Roth Conversion from your pre-tax 457(b)/401(k)Plan account. Regardless of age or employment status, if you have a pre-tax account you may convert all or a portion of it to the after-tax Roth feature. These conversions are taxable events. Check with your tax adviser as to how you should pay the tax. In-Plan Roth Conversions are done inside the plan and may be just what the doctor ordered for you to have tax-free income during retirement.

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