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Question regarding UC DCP (401 (a)) to Roth IRA Conversion

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  • Avatar Redline 
    Participant
    Status: Physician
    Posts: 1
    Joined: 09/09/2019

    Hello everyone,

    I recently graduated from a residency program with the University of California system and thus am left with a DCP (401 (a)) Fidelity retirement account. The account is 7.5% of pre-tax income over the past 4 years with no employer matching. I have about $21,000 in this account. I am currently finishing a one-year fellowship and my current total income tax rate is 22%. I do not see myself returning to the UC system and would like to roll-over my 401 (a) to my Roth-IRA with Vanguard.

    1. Is this a wise move to roll-over into my Roth-IRA instead of just leaving it alone?

    2. Regarding taxes – Will I have to pay 22% taxes on the 21k if I rollover to Roth. If I do the rollover this year (2019) will these taxes be due when I get file my tax-return in April 2020?

    3. Is it possible to use the money in the 401 (a) account to pay for the taxes as I unfortunately do not have enough savings to cover the tax amount? Is this wise?

     

    Thank you for all that you do!

    #244784 Reply
    Avatar Peds 
    Moderator
    Status: Physician
    Posts: 4405
    Joined: 01/08/2016

    Yes.
    Yes.
    No.

    #244788 Reply
    Avatar StarTrekDoc 
    Participant
    Status: Physician
    Posts: 2040
    Joined: 01/15/2017

    +1.  What the smart guy above said. 🙂

    #244803 Reply

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