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Author: FoolMeOnce Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 75335  
Subject: Question for TMFPixie Date: 12/20/1998 9:07 AM
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I am wrestling with the decision to preserve my options by converting an existing regular IRA to Roth. The regular IRA includes both taxed and untaxed contributions. In addition, I am a federal civil servant with the Government's equivalent of a 401K (referred to as Thrift Savings Plan) This vehicle has limited investment options consisting of an S&P500 index fund, bond fund or money market fund.

My original longstanding plan upon retirement was to rollover the proceeds from the Government 401K into my regular IRA to provide greater flexibility of investment options including investment in individual equities. My research indicates that if I convert to a Roth, that a rollover of the Thrift Savings Plan funds would NOT be permitted. If I decide that the Roth conversion makes sense can an additional regular IRA be established to receive the proceeds of a rollover from my Government plan?

Regards,
Gary Haga
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Author: SnootFool Two stars, 250 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 7377 of 75335
Subject: Re: Question for TMFPixie Date: 12/20/1998 11:04 PM
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FoolMeOnce:
<<My research indicates that if I convert to a Roth, that a rollover of the Thrift Savings Plan
funds would NOT be permitted. If I decide that the Roth conversion makes sense can an additional regular IRA be established to receive the proceeds of a
rollover from my Government plan?>>

If I understand your post (& the laws!) correctly, it's true that a 401K cannot be converted directly into a Roth IRA. However, as the second part of your your post quoted above indicates, it's perfectly legal to use a Traditional IRA as a conduit account. IOW, rollover the TSP into a Trad. IRA & then convert that money to a Roth. You don't have to open a new account to do this, just leave some token amount of money in the account after the first Roth conversion. Or, talk to your custodian, maybe they'll allow the account to exist in a dormant state, cash-free standing by for your retirement & TSP rollover.

Chris

PS- It's PixY! ;-)

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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: 7388 of 75335
Subject: Re: Question for TMFPixie Date: 12/21/1998 9:28 AM
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Greetings, Gary, and welcome. You asked:

<<I am wrestling with the decision to preserve my options by converting an existing regular IRA to Roth. The regular IRA includes both taxed and untaxed contributions. In addition, I am a federal civil servant with the Government's equivalent of a 401K (referred to as Thrift Savings Plan) This vehicle has limited investment options consisting of an S&P500 index fund, bond fund or money market fund.

My original longstanding plan upon retirement was to rollover the proceeds from the Government 401K into my regular IRA to provide greater flexibility of investment options including investment in individual equities. My research indicates that if I convert to a Roth, that a rollover of the Thrift Savings Plan funds would NOT be permitted. If I decide that the Roth conversion makes sense can an additional regular IRA be established to receive the proceeds of a rollover from my Government plan?>>


As Chris aka SnootFool mentioned, you cannot roll retirement plan money directly to a Roth IRA. It must first go to a traditional IRA, and once there it can be further transferred to a Roth IRA. To accomplish that when the time comes, you may use an existing IRA or a new one. Any broker/fund can help you with the process should you wish to use a new IRA for that purpose.

Regards….Pixy


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