Query

[Guest sridhar gurram]

Currently I don't have any IRA savings &

I plan to save in Roth IRA. Isit possible & where can I get the info needed.Also, does my employer need to know about this? Can I transfer my savings from 401(k) to Roth IRA?

Please help!

[John G]

You are making a wise move, an IRA is a great vehicle for retirement savings. Sources of info: banks, mutual funds or fund families (such as T Rowe, Vanguard, Janus, etc.) and brokerages. Bank options are likely to be very conservative such as CDs and basic mutual funds. There are about 8,000 mutual funds, and they come in more flavors then Baskin Robins ice cream. Brokerages can offer stocks, bonds and often mutual funds as well. Each type of IRA custodian will offer some type of basic info on how to get started. I suggest that you call at least three different firms and ask them to send you their "just getting started" IRA package. The topic of IRAs is frequently covered in Money, Worth, Kiplinger and other magazines. You will also find the WWW to be a good source. WWW.fundspot.com for a list of mutual funds WWW.rothira.com for a wide range of articles of Roth IRAs.

Privacy! The only people who are likely to know that you opened an IRA (Roth or regular) are your accountant/tax preparer, your wife (hopefully) and anyone who brings in your mail. It is not your employers business. They shouldn't ask, you shouldn't tell.

See other listings on 401K and Roth conversions... or wait for a CPA to answer the last part of your question.

[Kathy]

A 401(k) plan and a Roth IRA are 2 separate animals. If you are still employed by the employer who sponsors the 401(k), those assets must remain in the 401(k) plan. And remember, the 401(k) is a great place to defer money because of the current tax savings. If your employer matches or makes a contribution it is absolutely wonderful!!! But, you can open a Roth too (assuming your income level falls within the restrictions - MAGI of less than $160,000 for married filing jointly or less than $110,000 for single individual) and, although you won't see the immediate tax savings that you will on the 401(k), the distributions can be tax-free if you follow the rules!

Now, about moving the 401(k) to the Roth. If you have terminated service with the employer and are entitled to a distribution from your 401(k), you can roll that into a traditional IRA account (not a Roth). This rollover will be tax-free. Then, once in the traditional IRA, assuming your MAGI is less than $100,000, you can convert some or all of that money from the traditional IRA into a Roth. Remember, you will have to pay taxes on the converted amounts (but not penalties). As long as your income falls with in the restrictions, you can convert as little or as much of the traditional IRA as you can afford to pay taxes on.