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When you convert the deferred account to a non deferred tax retirement account (like a ROTH) you pay tax on all the amount in the 401k that has not been taxed yet. From then on the ROTH grows tax free.
The $600 will be added to your income for the year and at this point is not going to increase your income by so much that you will have a huge tax when you file.
Gross Income $54,360.00
Total Tax (Pre-Credits) $4,201.50
Of course any tax withheld from wages should be deducted form the tax to see what your actual tax refund or balance due would be for 2015.
You will most likely have to roll this 401K into a Trad IRA first (non taxable event) then convert the Trad to a ROTH.
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Yes, when you convert the Trad to a ROTH you keep the amount. The custodian may have a fee so you need to check with them but that has nothing to do with taxation of the conversion.
You will receive a 1099R for the conversion and you just include that information when you file your return. It looks like a distribution on your tax return from the Trad IRA.
A conversion to a Roth IRA results in taxation of any untaxed amounts in the traditional IRA. The conversion is reported on Form 8606, Nondeductible IRAs.
The amount that you withdraw and timely contribute (convert) to the Roth IRA is called a conversion contribution. If properly (and timely) rolled over, the 10% additional tax on early distributions will not apply.
I hope the follow up information clarified your situation.
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