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Author: fibus Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 75340  
Subject: IRA/Roth/401(k)--help? Date: 6/18/2000 2:05 PM
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Hey Guys.

I just read through the IRA section on the website--wow, i think it left me a little more confused than enlightened.

I just graduated from college and am trying to plan for the future. I have a 401(k) account setup with my employer (with matching contributions and all that good stuff), and I am looking into opening an IRA account. I initially felt that I should go for the Roth, but, I think that within the next 5-6 years (hopefully less!!), I will probably lose the privelege to contribute into it (as my AGI will probably increase above the limit). At this point, can I convert the Roth back into a normal IRA? Taking this into consideration, should I still go for the Roth, or just stick with a normal?
Another question I had was--If and when I decide to move from my current company, is it mandatory that my 401(k) account be closed (since it was set up with them)? If so, I can't transfer into an IRA Rollover account, since I would hypothetically already have a Roth or normal IRA account (right?--from what I understand, an individual cannot have both a rollover and a normal/roth IRA account). Keeping the 401(k) would be ideal, i would think, if it is possible, but if not, what then?

hmmm--there is certainly a lot of stuff out there. i'm learning that there's a lot more learning to do. but, i think it's sinking in, and a little progress is better than none.

I appreciate any help/advice anybody can throw at me!!

sincerely,
an overwhelmed yet determined Fool
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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: 22703 of 75340
Subject: Re: IRA/Roth/401(k)--help? Date: 6/18/2000 3:07 PM
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<< I have a 401(k) account setup with my employer (with matching contributions and all that good stuff), and I am looking into opening an IRA account. I initially felt that I should go for the Roth, but, I think that within the next 5-6 years (hopefully less!!), I will probably lose the privelege to contribute into it (as my AGI will probably increase above the limit). At this point, can I convert the Roth back into a normal IRA? Taking this into consideration, should I still go for the Roth, or just stick with a normal? >>

You could not convert a Roth IRA to a traditional down the road, nor would you want to. Assuming you can afford it, contribute the max to your Roth while you can. When your income reaches the point that you can no longer make new contributions, the Roth will continue to grow tax-free until your retirment. When you no longer qualify for Roth contributions because of your income, you can start making nondeductible traditional contributions.

<< Another question I had was--If and when I decide to move from my current company, is it mandatory that my 401(k) account be closed (since it was set up with them)? If so, I can't transfer into an IRA Rollover account, since I would hypothetically already have a Roth or normal IRA account (right?--from what I understand, an individual cannot have both a rollover and a normal/roth IRA account). >>

You've misunderstood something along the way. You always have the option, when leaving an employer, to move your 401(k) to a conduit traditional IRA.

<< Keeping the 401(k) would be ideal, i would think, if it is possible, but if not, what then? >>

This issue is discussed frequently on the Foolish 401(k)'s board. Check it out.

TMF ExRO
Phil Marti

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Author: rensimer Two stars, 250 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 22722 of 75340
Subject: Re: IRA/Roth/401(k)--help? Date: 6/19/2000 4:39 PM
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--from what I understand, an individual cannot have both a rollover and a normal/roth IRA account).

You seem to be under the impression that you can only have one IRA account. You can have as many different IRAs as you qualify for. You can start with a Roth (or Roths, depending on how many custodians you wish to have), then, in later years, make contributions to a nondeductible traditional IRA (or IRAs) when you no longer qualify for the Roth, and, additionally, have a Rollover/conduit IRA if you transfer funds from a previous 401k. It's just a matter of bookkeeping.

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