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<<I am 56 yrs old & have 96K in 401k with former Employer. I am disabled. Is it wise to put it in a 401K
of some kind in my bank? I don't care if it is low-interest, I just want it safe! Can I roll it into a Roth 401k, so in five years I can take it out with no taxes? Right now the 401k is in GIDS and other interest bearing accounts. Thanks. >>

All right, "Safe" vs. diversified. Although I personally feel that you would be better served with some Fixed (bonds, cds) and some Stocks to cover you through inflation. The Fixed portion would give you living expenses and tide you over through stock market lows. The stock portion would give you growth in value to cover you through inflation. Now I am off this short soapbox and ready to answer your questions.

You can rollover your 401k to an IRA with the bank. Go ask the customer service rep to help you open a CD IRA. In fact, if you want to be extra paranoid, go to a second bank (not a second branch) and split the 401(k) account between the two to make sure you have FDIC insurance of $100,000 in each bank.

When you transfer the funds from the 401(k) to the IRA(s) you will not incur taxes until you request a distribution from an IRA. You will only be taxed on the amount you withdraw. Since you are disabled, you will have income taxes but no penalty taxes on any withdrawal.


If you "convert" the IRA (invested in CDs) from a Traditional IRA to a Roth IRA, you pay taxes NOW instead of later AND you restrict yourself from getting to the money for 5 years. The taxes you are avoiding are taxes on future income. [Soapbox: Based on the investment choice: not much future income = even less in taxes avoided]

I am assuming you see a need for the money after 5 years. With that short of timeframe, I would leave it in a Traditional IRA and let those tax dollars you save now earn income for tomorrow.

If you don't foresee the need for the money after 5 years, (back on my soapbox) then you need to reconsider how "safe" you really need this money to be.
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