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Greetings, Cepreu, and welcome.

<<In the last few years, I've accumulated (unmatched by my employer) close to $40,000. I left the company a week ago and am contemplating rolling it all over to a Roth IRA in order to get better gains. What bit of Folly can you offer me on this? >>

First, you may NOT roll your 401k to a Roth IRA directly. You must first transfer it to a traditional IRA. Once there, then you may transfer it to a Roth IRA. Should you desire to do this, you should use custodian-to-custodian transfers all the way. Your plan administrator and IRA custodians will know how to do this and can guide you through the necessary steps. Just tell them what you want to do. Custodian-to-custodian transfers avoid any and all tax hassles with these transactions.

Around Fooldom, we believe we can do better with our money than most 401k plans. Thus, we tend to support the action you are contemplating. Be aware, though, that when the 401k finally ends up in the Roth, it may never again be transferred to a new employer's 401k plan. The money must stay in a traditional IRA all by itself to retain that eligibility. Thus, if you think you may want to do that at some future date, then you don't want to move it to a Roth. Either keep it in your old employer's plan or keep it all by itself in a traditional IRA instead.


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