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Author: shhazam2 One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 19026  
Subject: Rollover 401K to what? Date: 7/3/2001 6:03 PM
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Has anyone rolled a 401K over to an IRA. Is a Roth IRA available for this type of rollover?

Just wondering!
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Author: ibnana Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 7016 of 19026
Subject: Re: Rollover 401K to what? Date: 7/3/2001 6:49 PM
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Has anyone rolled a 401K over to an IRA. Is a Roth IRA available for this type of rollover?

I think many people that post on this board have done the rollover from 401K to IRA. To avoid any witholding or tax make sure it's done directly from one account to the new IRA and that it's doesn't pass through your hands during the rollover.

After it's in the new IRA, then you can roll it into a Roth, but you will then owe tax. You also must not be over a certain income level (I forget what that amount is, but it's fairly high). You would have to run some numbers to decide if it's worth it to pay the tax and roll to a Roth where it can then grow totally tax free.

We did not do any of this, but we investigated it pretty thoroughly.

Carol


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Author: billjam Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 7017 of 19026
Subject: Re: Rollover 401K to what? Date: 7/3/2001 6:52 PM
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I rolled a 401K held at Vanguard to an IRA at Vanguard in 1997. Very easy to setup if you can stay with the same fund family. They did most of the work. Even if I had wanted to move the funds to another fund family I think I would have done the rollover with Vanguard first to avoid problems. The IRA could be transferred later.

Not positive but I don't believe you can rollover from a 401K to a Roth IRA. Also, if you've made after-tax contributions to the 401K, they will be returned to you. You've already paid the tax so just invest them in a taxable account.


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Author: ResNullius Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 7018 of 19026
Subject: Re: Rollover 401K to what? Date: 7/3/2001 7:02 PM
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Has anyone rolled a 401K over to an IRA. Is a Roth IRA available for this type of rollover?

Yes. Vanguard made it as easy as pie. www.Vanguard.com is the place I went for help. Good luck.



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Author: Crosenfield Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 7019 of 19026
Subject: Re: Rollover 401K to what? Date: 7/3/2001 8:16 PM
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"Is a Roth IRA available for this type of rollover?"

To put what you've already been told just a little differently,
yes, but it is a two-step process.
You roll your 401k to a traditional rollover IRA. There is no
tax due as long as you make it a trustee-to-trustee transfer and
do not yourself take possession of the money at any point. You
have the 401k trustee send the check to your new IRA trustee. Or
they can send the check, made out to the new trustee, to you, so
you see the amount of the check and that they did indeed issue it.
At this point you have the right to make a further conversion into a new employer's 401k if you so desire and the new employer accepts.

The next step involves taxes. If you then want to convert the
new traditional IRA to a Roth, and your trustee accepts the Roth,
you can direct the trustee to make that conversion. Tax will be
due on the non-taxed amount of the conversion, based on the value
of the conversion on the date of the conversion. Also at this point
you lose the right to subsequently convert to a new employer's 401k.

Before making such conversion, be sure your income level for the
year will fall into the range making you eligible for a Roth
conversion. If you make a mistake, you can "recharacterize" your
Roth back to a traditional IRA, but the trustee will charge you a
fee for doing it, plus there will be paperwork and some trouble.
Good luck! Chris

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Author: MDGrabhorn Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 7024 of 19026
Subject: Re: Rollover 401K to what? Date: 7/4/2001 2:01 AM
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>>Has anyone rolled a 401K over to an IRA. Is a Roth IRA available for this type of rollover?<<

STOP!

Before you consider rolling over your 401k, does it contain any employer stock? If so, and if you would like to hold onto that stock and some tax advantages, consider NOT doing a rollover. Go to www.irs.gov and pull the publication 575, see page 19 for NUA rules.

If no securities roll away.

Good luck.

MDGrabhorn, CFP
www.pensionrecovery.com

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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: 7028 of 19026
Subject: Re: Rollover 401K to what? Date: 7/4/2001 8:48 AM
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Before you consider rolling over your 401k, does it contain any employer stock? If so, and if you would like to hold onto that stock and some tax advantages, consider NOT doing a rollover. Go to www.irs.gov and pull the publication 575, see page 19 for NUA rules.

Or, for a far simpler explanation, see my article "Taking Stock" at http://www.fool.com/retirement/manageretirement/manageretirement4.htm

Regards..Pixy

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Author: islandee Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 7032 of 19026
Subject: Re: Rollover 401K to what? Date: 7/4/2001 2:06 PM
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Clarification please. After converting from a 401(k) to a traditional IRA, you write:

The next step involves taxes. If you then want to convert the
new traditional IRA to a Roth, and your trustee accepts the Roth,
you can direct the trustee to make that conversion. Tax will be
due on the non-taxed amount of the conversion....

Do I interpret this correctly: In this process, you're saying that I was able to roll over both taxed and non-taxed funds from the 401(k) to a traditional IRA? I thought that I had to exclude the already taxed funds from the rollover.

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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: 7033 of 19026
Subject: Re: Rollover 401K to what? Date: 7/4/2001 2:53 PM
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Islandee writes:

Do I interpret this correctly: In this process, you're saying that I was able to roll over both taxed and non-taxed funds from the 401(k) to a traditional IRA? I thought that I had to exclude the already taxed funds from the rollover.

While NEXT year you will be able to transfer after-tax monies in a 401k to a traditional IRA, THIS year you may not do so. When you leave your job and transfer your 401k money you will get a check for the after-tax contributions because they cannot be transferred to a traditional IRA (or to a new employer's plan). Therefore, this year only pre-tax money may be transferred to the traditional IRA. If you later decide to transfer that money to a Roth IRA (the only way 401k money can get there), then the money will be taxed in the year the Roth conversion occurs.

Regards..Pixy

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Author: MDGrabhorn Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 7034 of 19026
Subject: Re: Rollover 401K to what? Date: 7/4/2001 2:56 PM
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>>Or, for a far simpler explanation, see my article "Taking Stock" at http://www.fool.com/retirement/manageretirement/manageretirement4.htm<<

Are you saying the IRS publications are not fun and easy to read? All kidding aside your article is an excellent explanation of a issue that often gets overlooked.

MDGrabhorn, CFP
www.pensionrecovery.com

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Author: janicedowden One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 7039 of 19026
Subject: Re: Rollover 401K to what? Date: 7/4/2001 7:49 PM
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Re rolling 401-K into an IRA: If you retired age 55 or older, but are not yet 59-1/2, be aware that you can pull money from your 401-K without the 10% income tax penalty, which you cannot do from an IRA without incurring the 10% penalty. (You can also pull equal life-time installments from an IRA where no 10% penalty is accessed, but I'm talking strictly about pulling out irregular sums prior to age 59-1/2.)

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Author: phooley Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 7040 of 19026
Subject: Re: Rollover 401K to what? Date: 7/4/2001 7:52 PM
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... be aware that you can pull money from your 401-K without the 10% income tax penalty ... I'm talking strictly about pulling out irregular sums prior to age 59-1/2.)

I think that advice can be misleading. The 401(k) plan may not allow the flexibility you're suggesting.

Phooley in Phoenix



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Author: janicedowden One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 7041 of 19026
Subject: Re: Rollover 401K to what? Date: 7/4/2001 8:08 PM
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Phooley in Phoenix posted a valid comment that a particular 401-K plan "may not allow the flexibility" to pull irregular sums (so you could avoid 10% income tax penalty). That is probably true, but so many folks don't know that the IRS rules DO allow that way around the 10% penalty, that I wanted to make sure they were aware of it.

So many of us rush to roll over our 401-K into an IRA, only to find out later that we might have given up something in process. For example, several of the mutual funds in my former employer's 401-K, because of volume, charge very reduced fees for their service (example: about 1/2 for Vanguard S&P's already low fees). So, if you rolled into an IRA in same type of mutual fund, you would make less net return each year than if you left it in your 401-K.

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Author: islandee Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 7042 of 19026
Subject: Re: Rollover 401K to what? Date: 7/5/2001 2:32 AM
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Just a quiet rant.

You wrote:

"While NEXT year you will be able to transfer after-tax monies in a 401k to a traditional IRA, THIS year you may not do so....'

For various reasons I live and work overseas. In that situation, I spend a lot of time with Brits who seem much better represented in overseas communities; a few of them (and the number is growing) are retired. My occasional recounting of the US tax laws and the obligations it imposes upon me into retirement and unto and beyond death, wherever in the world I may be, is an unending source of humor, and mystification, to them.

The humor arises in their eyes from the excruciatingly detailed and constantly changing laws and regs which the IRS imposes upon US citizens worldwide (witness the above, not untypical breakstep between THIS and NEXT year). British expats are free of UK taxation, utterly. My attempts at explanations end when listeners' eyes inevitably glaze over--the complexity that I must keep abreast of and wade through is simply irrelevant to them.

The mystification arises in their point of view from how the land of the free, the home of capitalism, free enterprise, blah, blah, can be so restrictive with regard to what an individual can do with his money.

I must agree.


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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: 7043 of 19026
Subject: Re: Rollover 401K to what? Date: 7/5/2001 6:47 AM
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Islandee writes:

Just a quiet rant.

You wrote:

"While NEXT year you will be able to transfer after-tax monies in a 401k to a traditional IRA, THIS year you may not do so....'

For various reasons I live and work overseas. In that situation, I spend a lot of time with Brits who seem much better represented in overseas communities; a few of them (and the number is growing) are retired. My occasional recounting of the US tax laws and the obligations it imposes upon me into retirement and unto and beyond death, wherever in the world I may be, is an unending source of humor, and mystification, to them.

The humor arises in their eyes from the excruciatingly detailed and constantly changing laws and regs which the IRS imposes upon US citizens worldwide (witness the above, not untypical breakstep between THIS and NEXT year).


You're blaming the Infernal (sic) Revenue Service who merely enforces the tax laws passed by Congress and enacted by the President. Put the blame on Capitol Hill and the White House where it belongs.

Regards..Pixy

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Author: saml72933 Three stars, 500 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 7044 of 19026
Subject: Re: Rollover 401K to what? Date: 7/5/2001 9:30 AM
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<Just a quite rant>

islandee, go over to the "Tax Reform" board and read some of the rants there. Very interesting stuff.

We would like to hear your comments on the subject.

Sam

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