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Author: br0ce Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 76079  
Subject: 401k rollover to IRA, IRA rollover to Roth IRA Date: 3/21/2001 8:54 PM
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Is this correct?

You can contribute to both a 401k and a Roth IRA.
The Roth is limited to $2000.
The 401k doesn't have this limit.
You can rollover your 401k into a traditional IRA
You can rollover your traditional IRA into a Roth.

If this is true then would'nt I be able to contribute more than this $2000 limit by simply rolling over from 401k to traditional, then to Roth once a year??

What am I missing here, are you limited to the amount of times you can rollover? is there a time span that must occur between rollovers? I must be missing something. Thanks.....
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Author: bacon Three stars, 500 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 28567 of 76079
Subject: Re: 401k rollover to IRA, IRA rollover to Roth I Date: 3/21/2001 9:25 PM
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<<Is this correct?

You can contribute to both a 401k and a Roth IRA.
The Roth is limited to $2000.
The 401k doesn't have this limit.
You can rollover your 401k into a traditional IRA
You can rollover your traditional IRA into a Roth.

If this is true then would'nt I be able to contribute more than this $2000 limit by simply rolling over from 401k to traditional, then to Roth once a year??

What am I missing here....>>

It's correct as far as it goes. The rub is the frequency at which you can roll your 401(k). Basically, the only time you can take your money out of your 401(k) for this purpose (without substantial penalty) is when you leave the company. A 401(k) rollover is a one-shot affair. This rollover does not count against your IRA contribution limit, so in the one year of the rollover, you could easily exceed $2k in the deposit to your IRA.

One minor detail, also: while it's true your 401(k) doesn't have a $2k/yr limit, it does have, for 2001, a $10.5k limit from you, and a $25k (I think) limit on total contributions, including any company match.

Hope this helps.

Eric Hines

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Author: garthman Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 28572 of 76079
Subject: Re: 401k rollover to IRA, IRA rollover to Roth I Date: 3/22/2001 6:04 AM
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If understand all this correctly, when you move funds from your regular IRA to a ROTH IRA, don't you have to pay ordinary income tax on the "withdrawal" from your IRA? I don't know of a tax free roll-over from a rgeular IRA to a ROTH IRA?

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Author: PMcMullenCT Three stars, 500 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 28576 of 76079
Subject: Re: 401k rollover to IRA, IRA rollover to Roth I Date: 3/22/2001 9:11 AM
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If understand all this correctly, when you move funds from your regular IRA to a ROTH IRA, don't you have to pay ordinary income tax on the "withdrawal" from your IRA? I don't know of a tax free roll-over from a rgeular IRA to a ROTH IRA?

You are correct. I don't think the original poster was proposing to get pre-tax money into a Roth IRA, only to get more than the "maximum" $2,000 annual contribution into a Roth IRA each year.

However, since you have to leave your job to qualify for such rollovers, at many companies you aren't immediately eligible to participate in the 401K plan and it may take even longer to vest in matching contributions, his proposal is at the very least unwise, if not impossible.

What may be helpful to those wishing to increase the balance in their tax free retirement accounts, is the Portman-Cardin bill currently in Congress. It would (among other things) create a Roth 401K plus account, that would allow after-tax 401K contributions to be treated like Roth IRA accounts - tax free withdrwals at retirement. For more information on this legislation, see:

http://www.passpensionreform.org/housedetails.htm#lang

(and be sure to let your legislators know that you support this legislation)

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