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Question for the Money Doctors

Question submitted on Aug 22, 2013.

Question

I have to rollover an old 403b in the amount of approximately $5,000. I want to roll it over into my ROTH IRA. I am 51 years old. What are the pros and cons of this move?

Answer

It depends on your tax bracket. If you are in a lower tax bracket, you will pay a small amount of tax. If you are in a higher bracket, you will incur greater taxation. The benefit over the long run is that your account will grow tax free.

It is good to consider the benefits of having a mixture of tax deferred and tax free retirement accounts. How one selects how to fund each will depend on personal facts and ircumstances and amounts accumulated in the various accounts to date. Decisions should be made within the context of Your personal financial plan.


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