One of the tax law changes for 2013 gives workers of any age the ability to convert a regular 401(k) to a Roth 401(k), assuming your plan allows this. In the past, you had to roll from your 401(k) to an IRA, and then you could convert to a Roth. But beware – this type of conversion does not allow for a do-over.

If you convert a Traditional IRA to a Roth, then realize this was not in your best interest, you can re-characterize, or reverse the conversion. Once you convert the Traditional 401(k) to a Roth 401(k), it is a done deal. Another drawback to this type of Roth is you will have to take Required Minimum Withdrawals at age 70.5. To avoid this RMD, you call roll your Roth 401(k) into a Traditional Roth IRA.

If you are considering this type of transaction, please consult your CFP or CPA first.

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