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when I do a conversion, do I have to sell my holdings in the 401(k) and then just use the proceeds for the conversion -- or can I convert specific holdings just as they are?

You can convert specific holdings, if they are actual tradable securities, and the IRA custodian will accept them. The problem is, many 401(k)s have holding that are set up as 'investment trusts', which mimic mutual funds and/or ETFs, rather than the actual mutual fund or ETF itself.

Also, if you hold company stock in your 401(k) account, you should explore the Net Unrealized Appreciation (NUA) rules before you decide to convert the company stock.

AJ
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