I recently switched jobs, and have about $50K in a 401(k) plan from my previous employer. I was deluged with offers from T. Rowe Price (where the account is held) to rollover to one of their IRAs. My new employer also offers a 401(k), which I have signed up for, but the fund choices are pretty bogus so I don't want to rollover to that account. I'm currently 26, with about $120K in income, and will be married in August of this year.

I'm planning on contributing to the new 401(k) up to the employer match.

My soon-to-be spouse is 22 with about $30K in income in 2005. She is a teacher and does not have access to a 401(k) plan, just a defined benefits pention plan, that we'll likely never see since we are planning on moving in 1-2 years.

After 2 years of hard work, I've paid down my debt and we have 3 months expenses stashed with ING direct, and are now ready to take the next steps towards foolishness.

My questions are:

* Should I rollover the 401(k) to Vanguard and into a Roth IRA? As I understand it, this is possible without penalty, although I'm confused as to how I can dodge the tax man on the contributions I made to the account on the front end, and then dodge him again on the backed with the Roth.

* Independant of the previous comment, I'm planning on doing a Roth for my fiancee and I (two accounts) at Vanguard, and dumping $3k each from our ING "slush fund" into the 2 accounts for the 2004 tax year. Any reason I shouldn't do a Roth? I assume I can open a fresh account and still qualify the contributions for tax year 2004? Will 401(k) contributions offset our taxable income for Roth qualification purposes in 2005? I think we can just duck under the $150K celing if we juice up contributions a little bit.

* Is an ING Orange account (at 2.35%) the best place to stash the emergency cash fund (the 3 months expenses)? Should that be diversified or reallocated somehow?

Thanks for any and all comments!

pgray007: license to become foolish