Pros & Cons: Rolling over 401K/403B to an IRA ?

[RE2Boys]

Generally, the only IRA paperwork I'd keep are the Form 5498 that you receive each year. Also, if you've ever made non-deductible contributions to an IRA, you should have filed a Form 8606 showing what part of the IRA you have already paid taxes on. It is usually filed with your tax return but also can be filed as a stand-alone form.

If you've made non-deductible IRA contributions and did NOT file the 8606, I'd keep all your IRA paperwork and consult with a CPA/EA regarding how you fix the situation ASAP.

It also depends on the state retirement income laws. For example, in PA, if you take early distributions from a retirement plan (1099R, box 7, code 1 or 2), the distribution is taxable to the extent it exceeds your contributions into the plan. Lots of folks are scrambling at tax time reconstructing their contributions.

 

[Car-Guy]

I haven't moved mine yet but I have been thinking about it. My 401k has a number of investment options but nothing compared to my brokerage IRA.

Buying, selling and accessing my 401k money is limited and much, much slower. The good thing about that it keeps the "gambler" tendencies I have in check.

 

[Which Roger]

One thing I haven't seen mentioned is the case where you have post-tax money in a (tradtional, not Roth) 401k. I recall a discussion on this forum a couple years back where the IRS ruled that the pro-rata rules that apply when converting a TIRA to a Roth IRA don't apply when converting a 401k to an IRA. So if you have $100 in your 401k, where $90 is pre-tax and $10 is post tax, you can move $90 into a pre-tax IRA and $10 into a Roth, with no tax consequences. If the same thing was done from an IRA, 90% of the amount converted to Roth would be taxable, due to the pro rata rules. Maybe somebody who has actually done this can elaborate.

(edit) Google for "IRS notice 2014-54" to see the IRS ruling and a bunch of discussion.