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Author: Springbank Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 76384  
Subject: Which way to IRA? Date: 6/8/1999 9:28 PM
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I've determined that a self-directed IRA is where I want to put 401(k) money from a previous job. All well and good. However, I can't get a satisfactory (by that I mean knowledgeable) answer from my brokerage house about which type of IRA to choose. One guy says a 401(k) rollover goes into a non-contributory IRA, another says it's my choice between a conduit (rollover) account and a traditional account, but he can't tell me the difference between them. I know the difference, but I don't know the tax law.
Given my choice, I'd opt for the contributory account and would put in my $2000 per year.
Anybody know the scoop on this? All advice appreciated!
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Author: zgriner Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 11161 of 76384
Subject: Re: Which way to IRA? Date: 6/9/1999 6:47 AM
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One guy says a 401(k) rollover goes into a non-contributory IRA, another says it's my choice between a conduit (rollover) account and a traditional account, but he can't tell me the difference between them.

Listen to the second person. You can make contributions to your IRA after you roll your 401k money in.

Zev

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Author: jocave One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 11163 of 76384
Subject: Re: Which way to IRA? Date: 6/9/1999 9:59 AM
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<<<<<
I've determined that a self-directed IRA is where I want to put 401(k) money from a previous job. All well and good. However, I can't get a satisfactory (by that I mean knowledgeable) answer from my brokerage house about which type of IRA to choose. One guy says a 401(k) rollover goes into a non-contributory IRA, another says it's my choice between a conduit (rollover) account and a traditional account, but he can't tell me the difference between them. I know the difference, but I don't know the tax law.
Given my choice, I'd opt for the contributory account and would put in my $2000 per year. Anybody know the scoop on this? All advice appreciated!
>>>>>

Short answer: Your 401(k) can be rolled into a normal, every-day traditional IRA which you are then able to contribute to.

Long answer: It used to be that money from a 401(k) plan (or any other qualified retirement plan) *had* to be rolled into a conduit account to which you could not contribute. This allowed you to roll any conduit IRA into another employer's retirement plan. Recently (97?), the rules were relaxed so that you can legally mingle previous retirement plan balances with new contributions. If you do so, however, the account is "tainted" and may never be rolled into another employer's plan (not a big deal for fools). Many reps haven't caught up with this change and still believe the old rules apply. Their supervisor should be more clueful.

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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: 11170 of 76384
Subject: Re: Which way to IRA? Date: 6/9/1999 11:34 AM
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Greetings, Springbank, and welcome. You wrote:

<<I've determined that a self-directed IRA is where I want to put 401(k) money from a previous job. All well and good. However, I can't get a satisfactory (by that I mean knowledgeable) answer from my brokerage house about which type of IRA to choose. One guy says a 401(k) rollover goes into a non-contributory IRA, another says it's my choice between a conduit (rollover) account and a traditional account, but he can't tell me the difference between them. I know the difference, but I don't know the tax law. Given my choice, I'd opt for the contributory account and would put in my $2000 per year.>>

A "conduit" or rollover IRA is a traditional IRA that contains only money that was transferred from an old employer's retirement plan. As long as you make no annual contributions to that IRA, then all the money and earnings may later be transferred to a new employer's 401k plan. You may contribute to that IRA if you desire. When you do, though, you "taint" the rollover money. That means you may no longer transfer that IRA to a new employer's plan. Therefore, if you think someday you may want to put that money into a new employer's plan, then you should not add anything else to the rollover IRA. Establish a separate IRA for your annual contributions instead.

Regards..Pixy

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