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Author: TMFPixy Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 78297  
Subject: Re: What to do? Date: 9/30/1998 6:31 PM
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Greetings, Nsdave, and welcome. You asked:

Apologies in advance, I'm sure this has been answered/posted and is lurking about in some archive. Here's the situation. I've maxed out on my 401(k) percentage contributions, I've established a Roth IRA, I currently have an IRA in a rollover status, and a small 403(b). I've got about $16k in the rollover IRA, and $1100 in the 403(b). The question is, should I move my rollover IRA to the Roth IRA? I was debating on leaving the rollover alone, and contributing to the Roth IRA using the Foolish Four approach. I was also considering if possible, to close out the 403(b) and move the funds either to the Roth or the rollover IRA. I understand if any contributions are made to the rollover IRA, I lose the rollover status. Any information would be greatly appreciated.

The issue of converting an existing IRA to a Roth is contingent on how you will pay the taxes due on the conversion, how long the funds will stay in the Roth, and a few other issues. It isn't an easy decision and varies from person to person. For some concept of what's involved, see the analysis I did at http://boards.fool.com/Registered/Message.asp?id=1040013000441002&sort=postdate . That may help you make up your mind.

As to the 403b, it must first go to a traditional IRA before it can go to a Roth. If you roll it to your existing rollover IRA, it will "taint" that money and forever more prevent it from being rolled to a future employer's 401k plan. That's not a big deal to most Fools, but you should be aware of that. Also, be aware if you convert that money to a Roth IRA, it also can never again be rolled to a new employer's plan.


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