401K Rollover to Self Directed Roth- Good or Bad Idea

[Darren Looker]

My wife has around $30,000 in separate retirement accounts from 2 previous employers. She would like to combine these and roll it over into something self-directed so that it can be invested in RE. Since we expect it to grow and have higher taxes in the future, we have considered a Roth. She has no income. We normally file jointly. Federal tax rate is 24%. Is there a way to avoid taking a 24% hit when converting? Could she file federal income tax separately?

[Justin Windham]

@Darren Looker

I would recommend contacting several providers to get a feel for your options, the various pricing, and the products and services offered. As @Bernard Reisz mentioned, there is a fairly wide range of pricing in the industry.

Keep in mind, you can setup a Solo 401k for a side business and transfer in existing retirement funds, even if the side business does not generate as much income as your W2 job. You'll want to discuss the details of your situation with an expert to see if your wife would be able to participate in a plan setup for your self-employment. If you're considering a Solo 401k, you'll want to wait till after the transfer to convert funds to Roth.