Can I Convert My 401k Loan into a Roth IRA?

Key Takeaways

• You must have been affected by COVID-19 (directly or through income loss) to qualify for a coronavirus-related 401k distribution—being unaffected likely disqualifies you
• Even if the CARES Act permits it, your specific 401k plan administrator must choose to offer this option—check with your plan before assuming availability
• You can either spread coronavirus-related distribution income over 3 years OR roll it over within 3 years, but not both—choose one strategy
• You cannot convert a coronavirus-related distribution from a pre-tax 401k directly to a Roth IRA; pre-tax distributions must roll to pre-tax accounts only
• The 10% early withdrawal penalty is waived for qualifying coronavirus distributions, but ordinary income taxes still apply to pre-tax amounts