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Author: grgcombs Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 75871  
Subject: 401K Conversion Date: 1/12/1999 3:52 PM
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(Previously asked in wrong forum)

I just left my old job of 3 years after investing around $7000 in the 401K plan (20th Century Ultra didn't do as well as I'd hoped). I've now got a new job, and I had several options for where to put this money.

I'd decided (with help) to transfer it to an IRA, then from an IRA to a Roth Conversion account. Since I'm 25, this sounds like a fantastic way to embiggen my wallet when I retire by paying taxes now in my current tax bracket, but not paying taxes on my earnings in the Roth.

My problem is that I really can't afford the tax hit right now of the conversion from IRA to Roth. I can't use part of the 401k for taxes because that would be an unauthorized withdrawl.

So my question is should I leave my 401k money in the old company's 401k plan (limited flexibility with mutual funds) until I can take the tax hit, or should I see about putting it in an IRA now (more flexibility with mutual funds, any caveats?) and converting it to a Roth later this year or next?

I'm tempted to put it in an IRA now, but I'm not sure what problems I might run into....

Any advice for an investment newbie?

g
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