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Subject:  Re: What to do with my 401(k)... Date:  7/1/1998  11:03 AM
Author:  TMFPixy Number:  4092 of 90150

Greetings, GeekFoolBoy, and welcome.

Hmmm….something weird is going on with the board. Had I not just made two posts that got buried because they were dated "6/1/98", I would have skipped yours even though it's new because it carries the same erroneous date. That date makes the posts I just made look like I responded to something that wasn't even written at the time I answered. Interesting….Suppose it's something out of the X-Files? <g>

<<I'm new to this board, so I apologize if this topic has been covered before. Here's my story:

I recently changed jobs and need to decide what to do with funds from my 401(k) (held by Fidelity). As I understand it, I have 4 realistic options:

1. I can leave the funds in my old 401(k) indefinitely.
2. I can transfer the funds to a 401(k) at my new employer.
3. I can transfer the funds to a personal IRA.
4. I can transfer the funds to a personal Roth IRA.>>

Option 4 is not available. You cannot transfer money to a Roth IRA from a qualfied retirement plan like a 401k. Transfers to a Roth may be made from another Roth or a traditional IRA only. Thus, to get the funds to a Roth you must first transfer them to a traditional IRA.

Option 2 is available only if the new employer's plan accepts money from an old employer's plan. They don't have to, and many don't.

<<So, my question is whether to move the money into a plain or a Roth IRA. I'm 29 years old, the 401(k) is worth about $24K, and I'm in the 28% tax bracket. My income is sufficient to cover the taxes for the Roth conversion if I spread it over 4 years.>>

That decision hinges on a number of factors and is not cut and dried. You have to decide based on a whole host of factors pertinent to your individual situation. Read this link to see most of the issues that are involved in making up your mind:

<<And as a corollary, I would appreciate any advice on particular companies which offer either of these types of IRA's and the type(s) of investments best suited for my situation. Individual stocks? Index funds? Others?>>

Virtually any broker will set up a Roth IRA for you, and you can invest in a wide selection of options. In Fooldom, we believe that the selection of both is up to the individual. At your age, we would strongly suggest the use of stocks or an S&P500 index fund, but you and you alone have to make that choice based on your tolerance for the market's ups and downs.


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