Hi All...

I have a 401K with a past employer and it's currently placed in a conservative account - basically put in a coffee can - in other words doesn't earn much interest... Anyway, here's a few questions that I have:

1) How do I go about getting this money and placing it into a rollover IRA.

2) Is a rollover IRA the same as a traditional IRA?

3) I have a Roth IRA in which I invest/trade the money (buy/sell stocks). Are there penalties for moving from a rollover IRA to a Roth IRA? or is it just the taxes... How much taxes are we talking about?

4) In traditional IRAs, can the funds be moved in and out of the market or mutual funds?

Thanks in advance!
LavaDude

That distinction is gone, actually. Or more precisely, commingling rollover and contributory funds no longer eliminates your ability to roll the rolled-over funds back into a qualified employer plan.

--
Rich Carreiro

First, ring up your old employer and/or the 401(k) custodian and ask them to send you the requisite forms to roll the 401(k) into an IRA. Once the blank forms arrive, ring up the institution where the IRA is/will be and ask them what names/instructions/routing numbers/ wire transfer codes you need to put on the rollover form so that when the 401(k) custodian sends the money, it goes to the right place. Finally, send the paperwork to the 401(k) custodian and wait for the transfer to happen. Oh, and make sure to request a "direct rollover" or "trustee-to-trustee" rollover.

A "rollover" or "conduit" IRA is a traditional IRA. It has the rollover/conduit designation because pre-200X, you had to keep rolled over money in a separate trad IRA account if you wanted to maintain the ability to roll it back into a qualified employer plan. That distinction has since been abolished and I believe there is no longer any reason to avoid commingling rollover and contributory funds.

If you are eligible to convert a trad IRA to a Roth IRA, you pay full income tax (but not penalty) on the amount converted. To be eligible, your modified adjusted gross income must be $100,000 or less.

Yes.

--
Rich Carreiro

1) contact a custodian, like T Rowe price, and fill out a rollover application.

2) the rollover and traditional IRA are NOT the same. The differences are the traditional IRA you have may or may not have had taxes paid on it (was this a deductible traditional IRA or non deductible traditional IRA?). The rollover is "almost identical" to a deductible traditional IRA. The biggest difference would be a traditional IRA cannot be rolled into a 401k, where as a rollover IRA could be moved into a 401k if the 401k plan allows it and you choose to do this.

3) there are no "penalties" for taking a rollover IRA and converting it to a Roth. As long as you don't consider paying taxes a penalty as you indicated in your original post. This would be known to your custodian as a Roth Conversion in most probability.

4) yes, traditional IRAs can have it's assets move into and out of the market similar to how you described your Roth IRA in question #3.

speak to a professional or read up on this. I have had to go through this process once on a pension plan which was distributed to me when my employer was sold off (rolled this into a rollover IRA, then converted to a Roth after the rollover). I did not need a professional, as T Rowe Price helped me with the whole thing.

Hey lavadude, Here are some answers to your questions.

1. You open an IRA and in the paperwork indicate that you want to put your money from your old 401(k) into this new IRA.
2. For your purposes, yes, the rollover and traditional IRAs are the same.
3. This can't be done. Because the tax treatment on traditional and Roth IRAs is different, the accounts cannot be combined.
4. In a traditional IRA, you can move your money in and out of the market and between different mutual funds, whatever you decide is best.

You want to get more information, check out http://www.plannerconnect.com/retire...ncome-ira.html and some other pages there. Good luck.

You are thinking about rolling your Traditional IRA. So, that means you require higher returns. Or maybe you have something else in mind. However, rolling is not the problem, its taxes and penalties which are often common in this matter. There are some rules and strategy to avoid them. I think you should go for the terms carefully.

Choose a bank, brokerage firm or mutual fund company to rollover your 401K into. The financial institution you choose will give you a form that authorizes a direct rollover once you open the account. Do not forget to fill out the form authorizing your rollover. When you open an account, be aware that all financial institutions (banks, brokerages and mutual funds) must comply with the U.S. Patriot Act. This means you will be asked for your name, address, date of birth and other information to verify who you are.

__________________
Payday Loans