roll pension into Roth IRA?

[Guest jbenner]

I have a small amount of money in a "municipal pension" from a previous employer. I just started (Jan. 2001) a new Roth IRA for the 2000 tax year. Can my Roth IRA now absorb that amount from the previous pension ? I assume it will need to be turned into a Traditional IRA, then into a Roth. Just wanted to be sure...

[Michael Devault]

If your former plan is a 457 deferred compensation plan, the money cannot be rolled to an IRA, under current law.

However, if it is a qualified pension plan, the funds may be rolled into a traditional IRA. Then, if you meet the requirements for conversion in 2001, that IRA may be converted to a Roth IRA.

In order to convert, your adjusted gross income must be $100,000 or less (unless you are married and file separate returns). Also, if you convert, you'll have to pay taxes on the amount converted, after which time the money will grow income tax free.

Hope this helps.

[Guest jbenner]

thanks, michael. it does help!