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Subject:  Re: Rollover IRA Date:  1/28/2000  1:09 PM
Author:  pauleckler Number:  18385 of 90759

By combining rollover IRA funds with contributions or IRA accounts containing contributions your only loss is the priviledge of moving your IRA funds to a future employers 401K plan. Because most IRAs are much more flexible than 401Ks most people do not find this advantageous, so its a small loss.

Two advantages of 401K to keep in mind: if you leave the employer after age 55, you can begin penalty free distributions from the 401K immediately rather than having to wait until age 59-1/2. (Of course you could also set up an SEPP payout plan from the IRA to accomplish the same thing. Secondly, the 401K can be subsidized by the employer making it lower cost than the IRA.

Otherwise, you may combine your IRA without incurring penalties provided you do it correctly. Best is to arrange direct custodian to custodian transfers. This avoids problems with withholding taxes and potential penatlies on them.
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