Skip to main content
Message Font: Serif | Sans-Serif
 
No. of Recommendations: 0
We are about four years away from retirement. We have most all of our money in 401ks, his and mine. We will be in early 60s at retirement. Should we convert the 401ks to IRAs and is there tax consequences for this? Do we have to convert all of it or can we leave some of it in the 401k plan?
Thanks
Print the post Back To Top
No. of Recommendations: 1
Greetings, Fredamorris, and welcome. You asked:

We are about four years away from retirement. We have most all of our money in 401ks, his and mine. We will be in early 60s at retirement. Should we convert the 401ks to IRAs and is there tax consequences for this? Do we have to convert all of it or can we leave some of it in the 401k plan?

You may want to read my article "Transfer or Rollover Your 401(k)" at http://www.fool.com/retirement/retireeport/2001/retireeport010312.htm to see what may be best for you in your situation. In general, you will have far greater freedom in an IRA than you will in your 401(k) when it comes to the timing and size of distributions. Additionally, your investment choices will be far greater (and often less costly in terms of administrative fees, etc.) in the the IRA as well. And your heirs will almost certainly have far greater flexibility in how they inherit an IRA as opposed to a 401(k). The latter often force an immediate payout, whereas an IRA won't. As to taxes, if you follow the guidelines for transfer outlined in my article, there will be no adverse tax consequences when you move the money. Taxes will apply only when you take a distribution from the IRA, not when you move the money there in a direct transfer.

Regards..Pixy
Print the post Back To Top
No. of Recommendations: 0
THANK YOU TMFPIXIE. MY QUESTIION WAS PROBABLY PRETTY BASIC, BUT WE HAVE A LOTOF CATCHING UP TO DO AS FAR AS MANAGING OUR INVESTMENTS. YOUR ANSWER WAS GREAT! I SEE THAT YOU ARE RETIREING. GOOD LUCK AND IT SOUNDS LIKE IT WILL BE THE LOSS OF THIS MESSAGE BOARD AND I AGREE.
Print the post Back To Top
No. of Recommendations: 1
If you have company stock in either of your 401ks you might want to consider whether an "in kind" distribution of that stock makes sense to you. The following Fool article discusses this option:

http://www.fool.com/retirement/manageretirement/manageretirement4.htm

There are also a number of posts that discuss when it makes economic sense to take this route, but owing to my ineptness in searching these boards I'm unable to find them.

Happy hunting.
Print the post Back To Top