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Old 07-11-2011, 07:58 PM
 
221 posts, read 436,566 times
Reputation: 90

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i already have a roth, i love it.

i have a physical check that my previous employers 401k administrator sent to me.

i want to put it in the roth ira.

Should I:

Roll it over to the Roth? or Open up a traditional IRA, then convert it to Roth and then close down the traditional account.

Etrade said they cant roll a 401k to Roth....but I think they just want me to open up a new account with them!!!


please help.
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Old 07-11-2011, 09:01 PM
 
15,629 posts, read 26,074,095 times
Reputation: 30896
Quote:
Originally Posted by stp_fan View Post
i already have a roth, i love it.

i have a physical check that my previous employers 401k administrator sent to me.

i want to put it in the roth ira.

Should I:

Roll it over to the Roth? or Open up a traditional IRA, then convert it to Roth and then close down the traditional account.

Etrade said they cant roll a 401k to Roth....but I think they just want me to open up a new account with them!!!


please help.
If your 401K was a traditional tax deferred retirement vehicle, you can't put it in your Roth, because you haven't paid taxes on it. If your employer is taking taxes out of the check they are sending you, I can't see why you couldn't put into your Roth -- unless you are unemployed and don't expect to be -- I think you still have to earn the money in wages to put it in any IRA.
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Old 07-11-2011, 10:22 PM
 
221 posts, read 436,566 times
Reputation: 90
um...
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Old 07-12-2011, 02:14 AM
 
15,629 posts, read 26,074,095 times
Reputation: 30896
I'm sorry -- I was trying to cook dinner and type and was totally not clear.

Yes -- you would have to open a traditional IRA brokerage account to put your 401K funds into, and then convert it (which I would assume means pay the taxes) into your Roth.

A Roth IRA is money you have already paid the taxes on, and earns its money tax free. A 401K is pre-tax wages invested on your behalf.
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Old 07-12-2011, 03:51 AM
 
105,402 posts, read 107,360,425 times
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it may not be so simple. do you already have any traditional ira accounts where you werent able to take the deductions or fund a roth because you were over the income limit but funded them anyway? i know i have some ira's like that .

if you already have existing accounts with after tax dollars it works much different than you think.

lets say you have existing after tax ira's with 100k. lets say you have 100k in a 401k .

you roll that 401k into a rollover ira. at that point all your ira accounts are considered 1 total of 200k..... since 1/2 the money isnt taxable on a roth conversion because 1/2 your total was funded with after tax dollars you would pay tax on only 50% of the 401k money converted to a roth.
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Old 07-12-2011, 09:29 PM
 
Location: In a chartreuse microbus
3,863 posts, read 6,262,622 times
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Whatever you decide to do with it, remember you only have sixty days to do it before you are hit with huge taxes.
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Old 07-13-2011, 06:04 AM
 
20,793 posts, read 61,018,330 times
Reputation: 10690
You have to roll the 401K into a Traditional IRA, you can THEN roll that into a Roth-but you will pay taxes on that so it is a good idea to have your financial situation analyzed first to see if it makes sense to roll it over to a Roth.
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Old 07-13-2011, 06:21 AM
 
Location: Tampa, FL
27,798 posts, read 32,168,755 times
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Might be worth visiting a CPA or Tax person with experience in roll-overs. Doubt if you can add funds to your current ROTH -might have to establish a second account. There are tax implications as well.
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Old 07-13-2011, 10:41 AM
 
5,500 posts, read 10,471,366 times
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Quote:
Originally Posted by BucFan View Post
Might be worth visiting a CPA or Tax person with experience in roll-overs. Doubt if you can add funds to your current ROTH -might have to establish a second account. There are tax implications as well.
I added to to my current roth. Taxes will be split for me between 2011/2012.
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