I was in a union for over 13y, vested, and have a defined contribution of over $90k that was finally released.
I'm still in my early 30s and plan on being with my new employer until retirement (over 2 decades @ 55). I want to roll over that $90k+ into my new employer's Roth 457(b). However, my Defined Contribution won't allow a trickle rollover OR use any of that to offset my taxes without paying the additional 10% penalties. I don't have $21k to pay all of those additional taxes for 2026 (I *do* but it would eat up my entire emergency fund).
I'm wondering how to handle this. I thought about rolling it over into my employer's 457(b) **and then** trickle it into their Roth 457(b) plan at the maximum $24.5k/y for the next 4 years and only need to pay an additional $5.5k annual taxes which is much more digestible. I don't know if this is even possible within whatever laws govern this.
Are there other options where the balance between the additional interest offsets the taxes I have to pay out of pocket? For example, I can't imagine 4 years with the full $90k+ will offset the $21k bill vs splitting it up across 4 years.
I really have no idea what i'm talking about so, any advice is appreciated.
How to limit my tax liability on nearly a 6-fix Roth rollover?
byu/WolfieVonD inpersonalfinance
Posted by WolfieVonD
3 Comments
>How to limit my tax liability on nearly a 6-fix Roth rollover?
Don’t do a roth conversion unless you’re in an uncommonly low income year.
>I thought about rolling it over into my employer’s 457(b) **and then** trickle it into their Roth 457(b) plan at the maximum $24.5k/y for the next 4 years and only need to pay an additional $5.5k annual taxes which is much more digestible.
Why do you think a conversion is a good idea?
What tax analysis have you performed that makes you conclude that converting pretax assets to Roth makes mathematical sense?
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The Roth vs Traditional thing can be confusing.
Review how tax brackets actually work. This video explains the *progressive* nature of tax brackets.
* https://www.youtube.com/watch?v=VJhsjUPDulw
Then, once you have a handle on the progressive tax system, read this below to help connect the dots on why optimizing tax deferred assets may lead to the most tax efficiency over one’s lifetime. It is also why converting tax deferred assets to Roth during one’s working years may not be tax efficient.
* https://reddit.com/r/personalfinance/comments/10qwnrx/why_you_should_almost_never_contribute_to_a_roth
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Why do you want to do a Roth conversion instead of a regular rollover?