IRA Rollover

Archive for July, 2010

Question: Can I rollover multiple 401(k) plans into the same rollover IRA?

I have two 401(k) plans with different employers and wanted to roll them over into a rollover IRA. Is it possible to open just one rollover IRA account and rollover both 401(k) plans into this account? I believe there is a 60 day rule of some sort with regards to rollovers, can someone explain that to me fully and how it would apply if I did multiple 401(k) rollovers?

I also wanted to convert that rollover IRA into a Roth IRA but would it count towards my Roth IRA contributions for the year?

Answer: What you want to do is not a rollover but a direct transfer from your 401(k) accounts to an IRA trustee. I recommend Vanguard; they have low-cost funds and helpful information. Go to Vanguard (or wherever) and open an IRA account. It must be a traditional IRA, not a Roth. Then contact your former employers, request a distribution form, fill it out, send it back. Your 401(k) account will be transferred directly to the IRA. You won’t get a check. You won’t have to worry about the 60-day rollover window.

The transfer must be to a traditional IRA. Once that IRA is funded, you can convert all or part of it to a Roth. Remember, you have to pay taxes on the amount you transfer. A conversion doesn’t affect contributions. But keep in mind the income limits that apply to a Roth (if you make too much money you don’t qualify).

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