IRA Rules

Archive for February, 2006

Question: Should I move my 401k into a Traditional or Roth IRA?

I have a 401k with my current employer but am leaving to a new employer and they don’t have a 401k. I am thinking of rolling my 401k into either a Roth or Traditional IRA… but dunno which is best. I know traditional IRA distributions are taxable and can only start taking them after 59 1/2 without penalty, im not too sure about Roths. For further info, I am still young (in my twenties).

Which should I do?

Answer: You cannot roll it directly into a Roth IRA without unhappy tax consequences. Roll it into a traditional IRA. In 2010, a “window” will open for possible conversion of conventional IRAs to Roths. Consider it then.
Start a Roth IRA when you begin your new job.

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