- 1). Request a distribution from your 401k plan by completing the distribution form available from your plan, if you want to move money from your 401k plan to a Roth IRA through a rollover. You can avoid the 20 percent mandatory withholding by requesting a transfer instead. If you elect a transfer, skip to Step 3. You can only convert money from your 401k plan as a rollover if you have stopped working for the company or if you are at least 59 1/2 years old.
- 2). Redeposit the money distributed from your 401k plan to a Roth IRA within 60 days of taking the distribution. If you fail to complete the rollover, the money will be considered distributed.
- 3). Report the amount of the 401k plan conversion to a Roth IRA on your taxes. On line 16a of Form 1040, report the total amount of the distribution. Unless you have made nondeductible contributions to your 401k plan, also report this amount as a taxable distribution on line 16b. If you have made nondeductible contributions, reduce the amount of your 401k conversion by that amount on line 16b. For example, if you converted $20,000 and $2,000 came from nondeductible contributions, you would report $20,000 on line 16a and $18,000 on line 16b. The amount reported on line 16b will be included in your taxable income.
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