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Author: punrein Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 75592  
Subject: All these IRAs and so many places to go Date: 4/28/2000 6:43 PM
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Hello All,

This is my first post, so I hope I don't sound too imbecilic! ;-)

Here's the deal: I've read the article "All About IRAs" on the fool. Based upon what I've read, and being only aged 32, it states that I would probably be better off transferring all of my old IRAs until a brand new ROTH IRA, one that I would manage myself. Sounds easy so far. Now, here's my situation:

I have a traditional IRA that I started with Primerica several years ago. Haven't touched it for many years, either. I have a rollover IRA from a 401K. I also have a ROTH IRA that I started in October 1998 until this board helped me realize (with some self-loathing here) that my investments were being eaten up by my naivete in investing with mutual funds (American Funds, to be more precise). With a front-end load around 5.25% and 12-b1 fees of .25%, I can certainly do better, and I want to.

Question:

1) Would I have to pay the capital gains that I made on all the old IRAs, or just the amounts initially invested?

2) Every time I move into a new 401K, should I transfer it into my ROTH, or should I just transfer it into another 401k?

3) If I transfer all these monies into a new ROTH IRA, could I still make the annual investment of $2000 for this year on top of all the transfer amounts?

Sorry for all these questions, but I want to make sure that I am doing the right thing (for a change)!

Thanks in advance for any help,

PUNREIN
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Author: TMFExRO Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 21641 of 75592
Subject: Re: All these IRAs and so many places to go Date: 4/28/2000 8:07 PM
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<< 1) Would I have to pay the capital gains that I made on all the old IRAs, or just the amounts initially invested? >>

Wipe the term "capital gains" from your mind when thinking of IRAs. Everything is ordinary income. Assuming that all your traditional IRA contributions were deductible or rolled in from 401(k)'s, every penny you convert to Roth is taxable ordinary income in the year of conversion.

<< 2) Every time I move into a new 401K, should I transfer it into my ROTH, or should I just transfer it into another 401k? >>

That's basically your choice. There are advantages to both.

<< 3) If I transfer all these monies into a new ROTH IRA, could I still make the annual investment of $2000 for this year on top of all the transfer amounts? >>

Yes. Rollovers/transfers/conversions don't affect your annual contribution.

TMF ExRO
Phil Marti


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