Mark Kohler breaks down 401(k) to Roth conversions: you can move large sums, but you pay ordinary income tax upfront on the converted amount. The trade-off is tax-free growth forever. After-tax money can also fund insurance or other vehicles.
With a Roth, there's a limited dollar amount that could go in. Well, we could convert quite a bit over from a 401 into a Roth and plow a lot of money into that Roth real quick. If you've got 401 money that you've accumulated. Well, I got to pay the tax on it. Well, you got to pay tax on that money before you put it in your insurance policy too. That's after-tax money that goes into your insurance policy. And yeah, I got to do the conversion on the 401. Yes, the Roth has a lower cap, but through conversions, maybe, and it's after-tax money anyway. So it's a level playing field.
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