I had a 401k with an employer two years ago. When I left I rolled it over to a IRA with the same firm but not into the new company. I have not added any money into the IRA but I did take one distribution in 1998.Is it okay to know start putting money into the account even if I had taken money out once.Can a participate in my companies 401K while I still have this IRAThanks
Yes, to both questions. IRA participation does not affect your participation in the 401K. Participation in 401K or in a company pension plan does reduce the income limit above which IRA contributions stop being tax deductible.You can make contributions to your rollover IRA. Doing so means that your rollover IRA may no longer be transferred to your new employers 401K plan, but most people would rather have the IRA because of greater flexibility to choose investments without the onerous rules and limited choices of some 401K plans.Think about converting that IRA to a Roth IRA. It has much better retirement tax provisions (none to pay) vs deferred taxes in the regular IRA. But to convert, you must pay income taxes on the balance converted.
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