401K to IRA question

[freddyw]

I am retiring shortly and want to convert my company 401K to an IRA at Vanguard. I have about $38K in taxed assets in my 401K and folks have suggested converting that portion of the 401K to a Roth IRA.

Where can I find good information about converting a 401K to a Roth IRA and in particular the rules associated with the conversion. I understand that there are AGI limits as well as a minimum timeframe that I need to keep the Roth IRA without penalty.

Is there a better way to invest the taxed 401K assets other than converting to a Roth IRA? I don't plan on using these assets for at least 5 years.

Your feedback on this is most appreciated.

[Art G]

Go read my post in the IRA vs. Roth thread. That may help.

[REWahoo]

Quote:

Originally Posted by freddyw Where can I find good information about converting a 401K to a Roth IRA and in particular the rules associated with the conversion. I understand that there are AGI limits as well as a minimum timeframe that I need to keep the Roth IRA without penalty.

Guide to Roth IRA Conversions

[walkinwood]

I didn't know you could have taxed (as in you've already paid taxes on these) assets in a 401-K.

If there is a way to move those to a Roth IRA, that would allow you to move the taxed amount without any tax today, and all future returns would also be tax free if you keep it to the specified term (5 years I think). I can't think of a better home for the assets.

[mickeyd]

Hey freddyw,

Quote:

I have about $38K in taxed assets in my 401K

I had a simular situation years ago. When I rolled over my 401(k) to Vanguard I had my 401(k) plan send me a check (payable to me) that represented all of my taxable contributions. I then dumped it all into the taxable TSM fund that I already had, where it sits today. I considered rolling it over with the other 401(k) funds, but I did not want to deal with all of the future tax paperwork that would be required. Very glad that I did it that way.

[crazy connie]

Many of us are waiting on this very issue. I have approx 90K of after tax cont in my 401K. Under the PPA signed by GWB last year, effective in 08 we can roll directly to a ROTH IRA. But, we must wait for the good old IRS to issue the guidance!