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<<[[- Starting in Jan 1st of 2003, I should be able to withdraw up to $400k tax free (even though I will
be under age 59.5). It should be federal tax-free, what about state taxes?]]

This is an issue that is unclear in my mind. At first I would have agreed. But in speaking with other professionals and looking at the actual wording of the law, I'm not so sure. In effect, this would eliminate the early withdrawal penalty after only 5 years after the conversion to the Roth IRA. >>

YIKES!! That would eliminate one big advantage of the Roth IRA if I pay the taxes on the money and can't withdraw it prior to age 59.5.

Based upon your other answers, it seems prudent for me to take the one stock in my portfolio that is at $3/share and which I expect to be dramatically higher in a few years (maybe even by the 4th qtr of this year) and move it to a Roth IRA. Then, if I am right, I won't pay any taxes on any of the gain when I start distributions at age 59.5. Tax-free status on growth is quite a big advantage as I see it.

I'll leave the conservative portion of my portfolio alone in the SEP-IRA. At least I won't have such a huge tax bill staring me in the face the next 4 years.

Thank you for your thoughts on this matter.

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