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Author: KVFisher Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 75340  
Subject: Roll Over Date: 1/10/2000 9:18 PM
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Last summer my company was bought out by a mega-monster behemoth defence contractor. We had been a relatively small (<200 employees) company, and were made an offer we collectively couldn't refuse. The short story is that our buy out gave each of us a bit of "found money" which was rolled over to us from our 401k plan -- i.e. pre-tax income, and was eligible for rollover to an IRA.

I took the lump sum and after opening an E*Trade account, have increased this sum by approximately 35% since September.

My questions: Can I still transfer this money from the standard IRA account I originally opened to a Roth IRA? If I can roll it into a Roth IRA, will I have to pay taxes on the entire amount after the 35% increase, or just on the original amount?
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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: 17637 of 75340
Subject: Re: Roll Over Date: 1/11/2000 9:38 AM
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Greetings, KVFisher, and welcome. You wrote:

<<Last summer my company was bought out by a mega-monster behemoth defence contractor. We had been a relatively small (<200 employees) company, and were made an offer we collectively couldn't refuse. The short story is that our buy out gave each of us a bit of "found money" which was rolled over to us from our 401k plan -- i.e. pre-tax income, and was eligible for rollover to an IRA.

I took the lump sum and after opening an E*Trade account, have increased this sum by approximately 35% since September.

My questions: Can I still transfer this money from the standard IRA account I originally opened to a Roth IRA? If I can roll it into a Roth IRA, will I have to pay taxes on the entire amount after the 35% increase, or just on the original amount? >>


Yes, you may convert your rollover IRA to a Roth IRA. When you do, the entire amount of the money converted (that means the original rollover contributions plus all subsequent gains) will be fully taxable in the year the conversion occurs. Therefore, whether you convert all or part of that rollover IRA, whatever is converted will be fully taxed.

Regards..Pixy

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Author: mattpam Three stars, 500 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 17647 of 75340
Subject: Re: Roll Over Date: 1/11/2000 1:10 PM
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You might want to consider shifting some of the assets
from your IRA to Roth, spread over several years. Hence
you can vary the amount of the transfer each year to control the tax impact in any given year. - - Matthew

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