IRA Beneficiary
34. Roth IRA
Now, what about the Roth IRA?
If you qualify, you may want to convert some or all of your tax-deferred money to a Roth IRA. Previously, you could only convert from a traditional IRA, so if your money was in a different tax-deferred plan, like a pension or profit sharing plan, you had to first roll your money into a traditional IRA and then convert to the Roth IRA.
But starting in 2008, you can roll over amounts from eligible retirement plans, which include qualified pension, profit sharing or stock bonus plans such as 401(k)s; annuity plans; tax-sheltered annuity plans; deferred compensation plans of a state or local government, and IRAs.
Of course, you will have to pay income taxes on the amount you convert. And, if you qualify, you may want to set up a NEW Roth IRA and make after-tax contributions to it.
Why go to all this trouble? Because it could be well worth it.