401(k) into a Roth IRA

[Guest bdo111]

I have 2 401(k) plans from previous employers. I am trying to decide whether I should roll them into my new 401(k) from my current employer or can I put them into an IRA. If I put it in an IRA I want to know if the Roth is the best way to go.

Since I missed the deadline for spreading the taxes out over 4 years would I be taxed at the end of next year for my income taxes or could I have the taxed money come directly out of the money that is being transferred? (ie: if I have $30,000 can I take that and only transfer over the $21,600 which is left over from the 28% taxing?)

Can anyone help with this. If I need to clarify please let me know.

[Guest RS Vatalaro]

If you remove part of the funds to pay the Roth conversion taxes, the funds you "remove" are considered an early withdrawal and subject to 10% excise tax.

Your personal financial and tax situation will determine whether it is best to roll the money to another 401k or to put it in an IRA and then convert to a Roth. Several websites have financial calculators that can assist w/ these calculations, but in my opinion it would be better for you to talk to a qualified financial planner who can personally interview you and run financial calculations that will assist you with making the decision. This is not an easy answer and can't be decided upon without knowing all of your financial facts and circumstances.

Hope this helps.

[Guest TYounkin]

I would first recommend rolling over your old 401(k) plan into a Trad. IRA. You won't have to pay any taxes, you'll be able to pick from many no load funds, and you will be controlling your own costs by selecting your own fund for this rollover. As for the Roth IRA, if you are young and can afford to pay the tax bill without having to touch any of the tax sheltered money then I say go for it.

------------------

http://www.geocities.com/CapitolHill/Congr...2077/links.html