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Greetings, mutigers, and welcome.

<<I am changing jobs which is forcing my wife to also chage jobs (relocation). My wife has a retirement benefit cashout/rollover value of about $2600. If she cashes out she would have to pay a 20% penalty and the tax on the amount (not an option) so we would like to rollover the amount. My question is can we rollover to a Roth IRA and pay the tax on the amount over the next four years or are you even allowed to rollover employee sponsored retirement programs to a Roth IRA. >>

Your wife may roll that money to a traditional IRA and then to a Roth IRA, but she cannot go directly to the Roth. To avoid any and all tax hassles, she should arrange for a direct transfer of those funds to the traditional IRA custodian. Both her IRA broker/fund and her plan administrator know how to arrange for a custodian-to-custodian transfer, so she should contact those folks to see hoe to set it up. When the money is in the traditional IRA, she may then have it transferred directly to the Roth. If she does so this year, then you may claim the income ratably in each of the next four tax returns. You should also ensure that all the money goes to the Roth (i.e., pay the taxes due from other money and do not use rollover money for that purpose). For further insight on Roth conversion considerations, read this link:

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