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Author: Digerati Three stars, 500 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 76079  
Subject: 401(k) rollover to IRA Date: 10/22/1997 6:42 PM
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OK, so I have changed jobs and have around $8000 from a previous 401(k) plan that I would like to roll over into a self-directed IRA, rather than my new employer's 401(k) plan. Can I do this? Do I need to roll it into a Roth IRA (most of the questions here seem to be about Roth IRAs)?

Obviously, I'd like to avoid all taxes. I'm also a loooong way from reaching 59 1/2.

Thanks in advance.
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Author: TMFPixy Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 503 of 76079
Subject: Re: 401(k) rollover to IRA Date: 10/23/1997 10:49 AM
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Yo, Digerati.

<<OK, so I have changed jobs and have around $8000 from a previous 401(k) plan that I would like to roll over into a self-directed IRA, rather than my new employer's 401(k) plan. Can I do this? Do I need to roll it into a Roth IRA (most of the questions here seem to be about Roth IRAs)?

Obviously, I'd like to avoid all taxes. I'm also a loooong way from reaching 59 1/2.>>

Yes, you may transfer your old 401k plan money to a self-directed IRA at a broker of your choice. Contact the broker, tell that agency what you want to do, and they will help you arrange for that. You should also contact the plan administrator of your old employer to see what the plan requires. They will know how to ensure the money goes directly from the plan to the IRA, too, so there are no tax ramifications to you.

Do you "need" to roll the money into a Roth in 1998? Can't say. Only you can after you've looked at your entire situation. If you do, though, you'll have to declare the money as income and pay taxes on it in '98, '99, '00, and '01. Once there, if it grows at a good clip and you stay in the same tax bracket at retirement, then you'll probably come out ahead. But only you can say for sure after looking at your entire financial picture.

One other thing: The 401k cannot be transferred directly to the Roth. Only a traditional IRA can be rolled. Therefore, to get the money there, the 401k must first go to a traditional IRA, and then it can be rolled to the Roth.

Regards……Pixy


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