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Author: FadeawayJ23 Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 75624  
Subject: ROTH IRA ADVICE Date: 10/27/2000 11:48 PM
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I am a 24 year old college graduate who runs a sports memorabilia business on Ebay. Currently, I am planning to open up a joint partnership under a corporate name to attain a larger presence in the collectibles world. As of 4 months ago, I was working contributing to my 401K. After enduring a broken foot, I stopped doing manual labor and decided to concentrate full-time on my "hobby". A few weeks ago, I received a notice from Principal that my 401K contributions needed to be addressed: either distributed to me in cash or rolled over into an IRA. I only have $3,500 in my 401K. After calling Principal, they sent me a heap of forms to fill out to convert my holdings to a Roth IRA. Here is my question: Am I doing the right thing?
I plan to contribute the maximum $2000, as my income falls under the $95,000 for a single filer. The idea of researching stocks and investing with my own insight and opinions is very fulfilling for me. This is why the Foolish Four approach looks great, but Prudential is not a discount broker. What should I do? I am investing for long-term growth, not looking to even touch this nest egg until I am young and gray =)
Any and all advice would be greatly appreciated. Thanks, Joe
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Author: TicTocMan Two stars, 250 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 25808 of 75624
Subject: Re: ROTH IRA ADVICE Date: 10/28/2000 3:43 AM
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Joe, choose a discount broker at http://boards.fool.com/Messages.asp?bid=100146 and have them take care of the hastle of transfering the funds. I think that you have to roll your 401k to a regular IRA then convert it (if it is to your advantage).

I hope this helps (it is too late for more than a quick note),

TTMan

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Author: BGPenhollo Two stars, 250 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 25857 of 75624
Subject: Re: ROTH IRA ADVICE Date: 10/30/2000 2:04 PM
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Joe posted ..

"A few weeks ago, I received a notice from Principal that my 401K contributions needed to be addressed: either distributed to me in cash or rolled over into an IRA. I only have $3,500 in my 401K. After calling Principal, they sent me a heap of forms to fill out to convert my holdings to a Roth IRA. Here is my question: Am I doing the right thing?"


Converting to a Roth IRA, while I think it's a good thing, it will be taxed on next your income tax.

You can roll your 401K into a traditional IRA 1st. I think if you look through the paper Principal sent you that is one of the thing you will have to do. After the funds are in a Traditional IRA, the IRA can be converted to a Roth IRA.

You can do this with any IRA provider. I suggest you give www.Vanguard.com a look. They have all the forms on-line to download that will roll-over your 401K to a regular IRA. You can convert to a Roth using their forms as well.

I also suggest that you look in VFINX, Vanguard's S&P 500 Index Fund. You may have enough in your 401K that they will let you roll it into VFINX.

Compare the expense of the Principal funds to VFINX and I think you'll see quite a difference.

Good Luck.

BGP


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