Attention Roth Flippers: Not So Fast
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January 3, 2013 - Tucked into the fiscal cliff tax package is a provision allowing 401(k) savers to convert some or all of their balance into a Roth 401(k) -- if your employer offers one, and not many do right now.
Why does this matter? With a regular 401(k) you pay taxes only when you withdraw the money at some point in retirement; presumably your tax rate will be lower because you no longer have income from a job. With the Roth variety, you pay the taxes upfront and future withdrawals are tax-free. Should you wind up leaving that money to heirs, it’s tax-free to them as well.