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Subject:  A two-part question Date:  9/22/1998  9:48 PM
Author:  KatiesDad Number:  5560 of 101509

I've got a question regarding my own financial planning and then one for a buddy I'm helping become Foolish.

My situation:

I workat a business (I'm also part owner) that offers a SIMPLE plan. A SIMPLE is basically a small business 401k. I can contribute $6,000 annually and the company will match 3% of my salary (+/- $3,000 including bonuses). This is pre-tax money that will be taxed years down the road. Right now I'd planned on putting away $6,000/ year and then putting add'l money towards two Roths - one for my wife and one for me. Would it not be smarter to hold my SIMPLE around $3,000/year, fund the two Roths at $2,000 each, and, THEN, put add'l money in the SIMPLE? This approach would insure us of the Roth's advantages.

My buddy's situation:

He works for a company that was recently purchased by a competitor. His job is safe. He contriubutes to a 401k plan and also to a pension plan. Is it possible/legal to roll a 401k plan to an IRA if the new business offers a 401k? Is it the new company's decision? Can he roll his pension into an IRA with or without converting his existing 401k? The new company does not offer a pension plan. I've convinced him that the Foolish approach will most likely beat the pants off the mutual funds offered by the 401k/ pension plans.

Sorry, didn't mean to write a case history.

Thanks, Larry
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