Major life milestones often have a major tax impact. Changes in your marital status, having a baby or adopting a child can have significant impact on your taxes. This is the place to ask questions about dependents, real estate, and other various scenarios that play a significant role in what taxes you pay.
01-10-2018 01:45 PM
My last day at my job was 12/31/17. I want to roll my Vanguard 401k directly to a traditional IRA with Vanguard. This is about $260k. I understand this is the best way to avoid any tax penalties. Here's my question: Does this prevent me from adding additional, pretax contributions for 2017 before 4/15/18? Then, can I contribute the max allowed for 2018? Or, should I leave my 401k where it is for now, open a new IRA so I can get the max deduction?
I was contributing about $13k/yr using payroll deduction and want to contribute as much as I can pretax to keep my retirement savings going.
Solved! Go to Solution.
01-10-2018 05:55 PM
A rollover does not count toward your contribution limit for the year. Make sure that you complete it as a direct rollover so that you don't have to take any additional steps on your tax return to make it tax-free.
You can roll your funds over into the new IRA account as soon as you're ready and you can still contribute the maximum allowed for an IRA to the IRA account so long as you do so before April 17th, 2018. The max for an IRA account is $5,500 ($6,500 if you're over age 50) or an amount equal to your earned income, whichever is lower.
If you have any other questions I'll be glad to help.
Senior Tax Advisor (Tampa, FL)