The Motley Fool Discussion Boards
Financial Planning / Tax Strategies
|Subject: Re: 401 k direct rollover vs. transfer to IRA||Date: 10/14/2002 3:48 PM|
|Author: vkg||Number: 61709 of 118606|
If you are happy with the mutual fund family that you are currently invested in then a mutual fund account with that company maybe a good choice. Brokers charge to buy and sell mutual funds but mutual fund companies frequently do not charge transaction fees for their own funds.
A trustee to trustee rollover is best. You never take control of the funds and therefore do not have to worry about the limits for the transfer.
When rolling over an account the sending administrator should forward dividends that are paid after the initial transfer. This resulted in a $.02 check from Fidelity fortunately with a postage paid envelope. I had considered allocating 10% to each of 10 choices to see what would happen.
If you have funds other than from the 401K to pay the taxes for a ROTH conversion then it maybe a good choice. If you have to take a distribution from the IRA to pay taxes and penalties then the conversion is likely not a good choice.
Converting from a 401K to a ROTH is a two step process. It is necessary to roll the 401K over to an regular IRA and then it can be converted to a ROTH.
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