• What are
  FAVORITES?
  Bookmark any page of our site conveniently in this one area.
  
  Sign In or Register so you can take advantage of all of the features of After Fifty Living

QUESTION:

I am a 55yr old female. I have about ten thousand in a 401k thru my employer. I would like to transfer that into a Roth IRA as I have heard positive feedback concerning this. What are your thoughts? 
Thanks. 
Roth Or Not

ASK YOU MONEY'S CATHERINE BERNARD ANSWERS:

Dear Roth Or Not:

The Roth IRA is an individual retirement account that allows your money to grow tax deferred and also to be withdrawn tax-free.  There is another benefit to the ROTH IRA at age 70 ½ years old; it is not affected by the required minimum distribution (RMD) rules of traditional IRAs.  If you have terminated your service with your employer (i.e. retirement, left employment) then you would have the option to roll it into a ROTH IRA.  You cannot just roll your active 401k to an IRA if you are currently still employed.  (The only exception allowing this is if it is written in your 401k plan that at age 59 ½ years old you are allowed to do an in-service withdrawal.)  There are restrictions on who can qualify for a ROTH IRA based on net income for the year.  However, those restrictions have been temporarily removed for the year 2010.  The ROTH IRA is considered an after-tax IRA, so any money that you roll into it will have to be claimed as income and taxes will be due on your next tax return.  Please speak with a qualified tax advisor to understand the taxable event associated with rolling retirement accounts into an ROTH IRA.  If you are able to meet the requirements of the tax benefits and if you are looking for a way to have your money grow on a tax free basis, then the ROTH IRA will work for you.  For more information, please speak with a financial advisor to be sure this option fits into your strategy for retirement planning. 
Thanks for the question.  Catherine A. Bernard

Leave a Comment -

Guidelines: We welcome your thoughts, but for the sake of all visitors to AfterFiftyLiving.com, please refrain from the use of obscenities, personal attacks or slurs. All comments are subject to our terms of use and may be removed. Repeat offenders may lose commenting privileges.