Question

Which of the following are benefits of converting traditional 401(k) balances to a Roth account within a qualified plan through an in-plan Roth rollover?

i. The conversion may result in a reduction in income tax in future years.
ii. The conversion will result in increasing after-tax deferred assets and reducing the gross estate.
iii. The conversion will eliminate the need for minimum distributions during the life of

the participant.

1. iandii

2. ii and iii

3. i and iii

4. i, ii and iii

Answer 1

Benefits of converting traditional 401(k) balances to a Roth account within a qualified plan through an in - plan Roth rollover :

One of primary benefits of using Roth account is you don't pay income tax when you withdraw funds in retirement.

Certain individuals are allowed to convert traditional IRA to Roth IRA as long as they met specific qualifications and pay income tax on conversion.

The conversion of traditional to Roth account process is creating a backdoor Roth where payment of Income tax to contributions.The taxable amount that is converted is added to income taxes and income rate is applied to total income.

Converting to Roth will guarantee that no income tax on the converted funds and those funds will earn before you withdraw them during retirement.Whatever the balance in the portfolio won't have to calculate an after - tax balance.

So as per question,the benefits are

¡.The conversion may result in reduction in income tax in future years.

¡¡¡.The conversion will eliminate the need for minimum distributions during the life of participant.

So answer is ¡ and ¡¡¡

Here ¡¡.The conversion does not result in increasing after -tax deferred assets and reducing the gross estate.As the  tax benefits are there in conversion but not reduction of estates.