Rolling 401(K) into Roth IRA

[Guest detaylor]

My wife has a small 401(K) from a previous employer than she has recently been told she must either cash in (with applicable witholding) or roll into another IRA. If she elects to roll it into her Roth IRA, does the amount she rolls count toward the maximum total she may deposit in Calendar Year 2005 (including catch-up limits), which for her is $4500? Or, since the amount is being rolled from another retirement plan, does the rolled amount not count toward the annual contribution limit?

[Guest saber]

My wife has a small 401(K) from a previous employer than she has recently been told she must either cash in (with applicable witholding) or roll into another IRA. If she elects to roll it into her Roth IRA, does the amount she rolls count toward the maximum total she may deposit in Calendar Year 2005 (including catch-up limits), which for her is $4500? Or, since the amount is being rolled from another retirement plan, does the rolled amount not count toward the annual contribution limit?

401K amounts cannot be rolled directly into a Roth. You must first goto a Traditional IRA account and then convert it to a roth since there is a taxable event going on.

401K is pre-tax account roth is after tax account.

Also the amount once converted does not count towards the yearly contributions.