IRA Rollover

Posts Tagged ‘change’

Question: Choices for 401K and rollovers when leaving a job and having maxed out IRA for the year?

I have seen somwhat similar questions but not this. I am probably going to leave my job in a few months to go to school. I have 2 IRA’s Traditional and Roth that are maxed out for 2007.

My question is, should I bother putting cash into my current employer’s 401K knowing that I will leave in a few months and will most likely not go to another job with a 401K option?

I know I can just leave it there but what are my options for rollover? I already maxed out the IRA for the year so what would I be able to do with it?

Answer: It doesn’t matter that you maxed out your IRA contributions. Rollovers and qualified transfers are in addition to your contribution limits. You can roll over directly into a traditional IRA. If you are eligible, and it makes sense mathematically to do so, you can then convert it to a Roth IRA. Most financial advisors can do the calculation to help you determine this, and will do so free of charge.

Whether or not you move to another job offering a qualified plan, it doesn’t make sense to have the old funds in an employer-sponsored plan. All you are doing is limiting your options and control. ALWAYS roll it into an IRA.