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I am planning to rollover my qualified plan pension lump sum from my previous employer into a Roth IRA. I already have a standard contributory IRA setup but do I need to setup a separate "conduit" IRA to accept the pension rollover and then roll that over to the Roth?

It would be simpler if I can use the existing IRA as the temporary rollover destination but I wasn't sure how mixing the rollover and contributory funds would affect my ability to roll again into a Roth this year.

Thanks,

Mitch
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AFAIK, you cannot do this, you can only roll a regular IRA into a Roth, but not anything else.
Don't be too hasty at rolling into a Roth. It's starting to look like this isn't a good idea for most people.
Regards,
Ray
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Ray said, re: converting a regular IRA to a Roth:

>>>It's starting to look like this isn't a good idea for most people.<<<

I'd be careful about the way you word these things, especially if the only basis for your opinion is that you think Congress will change the laws in the future to adversely affect the Roths.

Certainly the question of whether to convert is a very complicated one, and one that requires much research on the part of the individual. On that we agree. But I don't think "It's starting to look like this isn't a good idea for most people."

Regards,

orangeblood
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Orangeblood,

<<Ray said, re: converting a regular IRA to a Roth:

>>>It's starting to look like this isn't a good idea for most people.<<<

I'd be careful about the way you word these things, especially if the only basis for your opinion is that you think Congress will change the laws in the future to adversely affect the Roths.

Certainly the question of whether to convert is a very complicated one, and one that requires much research on the part of the individual. On that we agree. But I don't think "It's starting to look like this isn't a good idea for most people." >>

I agree. It's a bit of a stretch. Many will find the Roth inappropriate, many will find it advantageous, and many will find it neutral. I don't think a majority of "most" will fit in any category.

Regards…….Pixy
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<<I'd be careful about the way you word these things,>>
Yes, well, I worded it to say _exactly_ what I meant.

<< especially if the only basis for your opinion is that you think Congress will change the laws in the future to adversely affect the Roths.>>
LOL! The possibility that Congress won't change the tax laws significantly over the next few decades is about the same as the possibility that the Sun won't continue to rise in the east. You might want to take a look at what they did with ordinary IRAs a dozen years ago, when they made them non-deductible for most people. Look at the record.

Anyway, that's not my only basis.

<<Certainly the question of whether to convert is a very complicated one, and one that requires much research on the part of the individual. On that we agree.>>
Well, I wouldn't say "much", but certainly "some". All the complete analyses that I have seen have basically shown that the NET effect of paying taxes now vs. later is nil (for all but extraordinary circumstances).

<< But I don't think "It's starting to look like
this isn't a good idea for most people.">>
Ok, we differ here.

Regards,
Ray
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<<I'd be careful about the way you word these things,>>
>Yes, well, I worded it to say _exactly_ what I meant.<

Yes, well, I figured you did. I was just looking for a polite way to say, "You are spreading your opinion as fact, and, on top of that, your opinion is way off base." Sorry you couldn't take the hint.<g>


>>>LOL! The possibility that Congress won't change the tax laws significantly over the next few decades is about the same as the possibility that the Sun won't continue to rise in the east. You might want to take a look at what they did with ordinary IRAs a dozen years ago, when they made them non-deductible for most people. Look at the record.<<<

The record? Did they go back and suddenly make you pay taxes on those older IRA contributions? No. Did they in any way affect any contributions you had already made? No.

When they made the changes, they did not do so retroactively. So, while Congress will surely change some tax laws, and the sun will surely rise in the east, the possibility that they will retroactively change the Roth rules and begin taxing withdrawals is not as sure.

>>>All the complete analyses that I have seen have basically shown that the NET effect of paying taxes now vs. later is nil (for all but extraordinary circumstances).<<<

And all the complete analyses I have seen have shown the net effect to be significant if you expect to be in a higher tax bracket when you retire.

<< But I don't think "It's starting to look like
this isn't a good idea for most people.">>
>Ok, we differ here.<

Yep. I agree with Pixy: "Many will find the Roth inappropriate, many will find it advantageous, and many will find it neutral. I don't think a majority of "most" will fit in any category."

orangeblood
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Hmmm, well know that sometimes I come across as acerbic when I don't mean to be. So I went back and re-read my posts. I said, "There is a growing schools of thought that for many (if not "most") people, it is NOT a good idea to convert a regular IRA to a Roth. The more I thought about it, the more I tend to agree." I cannot read this as anything but expressing an opinion. The only thing I presented as "fact" was "...growing schools of thought...", and this part is certainly true, because there are more magazine articles & WEB postings everyday on this subject.

WRT looking at the record, I present this Q&A for your entertaiment and amusement:
Q: Can a 73 year-old retired widow with a small pension be exposed to a 50% tax on her Social Security check?
A1: No, there is no such tax bracker, and you are a mean-spirited rightwing extremist hatemonger for even asking the question.
A2: No. But if she takes a part-time job to get a little extra spending money, she has to pay income tax, plus 7.2% FICA tax (really 15.4%, but that's a different subject) (even though she is _collecting_ Social Security), and her SS payment and pension payment will be reduced if she earns more than a certain (small) amount. And her Medicare premiums can also go up. So her SS isn't directly taxed at 50%, but the effect is the same, when you look at the overall picture. Governments are very good at passing tax laws that have the same effect as a direct tax increase.

There is already talk about introducing some level of means-testing for Social Security benefits. If distributions from an IRA are part of that picture (and I don't see how they would not be), then taking a distribution from your IRA would have the effect of lowering the amount of money you get in your SS check. What would you call that, if not an effective tax on the money taken from the IRA? If you have already paid the tax once (when you convert a regular IRA to a Roth), you won't be able to undo that in 30 years when/if they impose an indirect tax on the ROTH.

Never underestimate the ingenuity of a politician when it comes to taking money out of your pocket.

And what if they ever convert to a sales tax or flat tax, or otherwise get rid of the income tax (yeah, right, and monkeys might fly out of my ass) after you pay the tax on the Roth conversion. Do you think that you'll get a refund?

This is going on a bit long. We all seem to agree that this is NOT a no-brainer; to accurately determine what to do is a highly complex calculation, involving unknown and unknowable assumptions (such as future tax bracket) for most people. I merely add, that in addition to the pure dollars-and-cents of the calculations, you need to assess the possibility that the government will change the rules of the game after you have made an irrevocable decision. They did _exactly_ this with real-estate in the 80's when they changed the rules for write-offs and deductions. They didn't make any retroactive changes, but it cost many people lots of money becaused the rules of the game were changed.

Just because the fish doesn't see the hook in that tasty worm doesn't mean that there isn't one.

Regards,
Ray
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>>>Hmmm, well know that sometimes I come across as acerbic when I don't mean to be.<<<

Me too... it happens to all of us.


>>>So I went back and re-read my posts. I said, "There is a growing schools of thought that for many (if not "most") people, it is NOT a good idea to convert a regular IRA to a Roth. The more I thought about it, the more I tend to agree." I cannot read this as anything but expressing an opinion.<<<

That one, yes. But not this one: "It's starting to look like this isn't a good idea for most people."

As for the the Roth benefits being *indirectly* affected... yes, I agree this is a possibility (as I have stated before).

>>>A1: No, there is no such tax bracker, and you are a mean-spirited rightwing extremist hatemonger for even asking the question.<<<

Is this just another case of you coming across as acerbic when you don't mean to?

orangeblood
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