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Author: ptheland Big gold star, 5000 posts Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121061  
Subject: Re: Roth IRA or regular IRA $22,000?? Date: 1/31/2000 1:32 AM
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<snip> Should I put it in a roth IRA or a reg IRA? I don't even know for sure if I can roll it into a ROTH IRA.

You can't do a rollover to a Roth IRA. Any rollover must be to a regular IRA. However, immediately after the rollover, you could convert the regular IRA to a Roth. This conversion will trigger taxes on your IRA, but there will be no penalty. Most advice I've heard says that you need to be able to pay the taxes from funds other than the IRA, or you'd be better off not converting.

So, you can't directly rollover the funds to a Roth, but you can easily get there by going through a traditional IRA first.

I remember reading something about only being able to put $2,000 per year into a ROTH IRA.

That's for your annual contribution. Conversions from a traditional IRA don't count against this limit.

Would a ROTH IRA be better in the longterm? Someone told me I should decide based on my tax bracket now and my tax bracket when I would be taking the money out. I do not understand tax brackets very much and don't know whether my tax bracket will be lower now or in the future when I retire.

This is just one of many variables to consider. If you're not comfortable doing this analysis on your own, I'd suggest you find a good financial planner or tax advisor to go over your situation in detail. There are a lot of things to consider, and some professional advice on this decision is usually a good investment.

Good luck with your decisions.

--Peter
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