The only thing you want to treat differently is any company stock from your 401k. Other than that it really does not matter where you put it and there is a lot to be said for having it all in one place.

These are great questions that our clients ask every day. Consolidating the accounts into a single IRA makes most sense so you can streamline your asset accounts, take advantage of lowering fees and getting a bigger ‘bang’ if one or more of the accounts are small and limit what you can invest in. If you are near 70 1/2, consolidation also makes it much easier to determine your RMD draw each year. The title “Rollover” on the account is only important so you know that these funds cannot be “Rolled” again for another 12 months…. However, you can “Transfer” the funds all day any day, without penalty.

Yes, you can convert these funds to a ROTH IRA after they are Rolled into a Traditional IRA. Once you roll the funds into a Traditional IRA, those retirement funds are no longer classified as 401K monies (and you lose the ERISA protection under the 401K).

The same tax rules apply to a Traditional IRA as the 401K (not a Roth 401K). The Traditional IRA funds when you contributed gave you a tax deduction for that year, so when you withdraw ANY portion of those funds, you pay taxes on the withdrawal. Same with the 401K. ONLY the ROTH IRA or ROTH 401K is built from After-Tax dollars, meaning your ‘basis’ or contribution to the account is YOURS without any taxes to be taken out at any time.

It is very important to always seek the assistance of a retirement planner or Registered Investment Advisor when considering these types of changes to your retirement accounts. The nuances can be tricky and COSTLY if you make a mistake. Pay the small fee for professional advice to save you thousands in costly errors.

Have a blessed Holiday weekend! http://www.newmanassets.com

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