Conference nyoss1::market_investing

	Re. .0

	Check out the OneSource Mutual Fund of Charles Schwab. You can select
	from about 200 mutual funds without paying any commissions (to Schwab). 
	All of these are available for IRAs also. 

	Note that if you invest less than $10000, there is an annual fee for
	maintaining IRAs with Schwab, but then most mutual fund families
	charge fees for IRAs. 

	Finally, you probably know that when your wife leaves her company,
	the check from the 401K should be made payable directly to the fund
	and not to her, to avoid the 20% witholding. 

    Take a look at the November 93 Money Magazine.  They had ideal 
    portfolios for families in different situations and at different
    ages.  It should give you a good mix of what funds to diversify
    into, like x% international/global, y% agg. growth, z% G & I, etc.
    
    
    p.s. watch the 12b-1's on the schwab funds, they can hurt you if you
    are looking long term.                                

    In any event,whatever you invest that money in had better be set up as
    an IRA or you'll be looking at a healthy penalty.
    
    Ken

    thanks for your help
    
    
    -doyle
    
    
    

    
    Since what goes into an IRA is typically after-tax income, and what
    goes into a 401k plan in pre-tax income, how do the taxes work
    if you transfer 401K money into an IRA? When the time comes to 
    draw on that money (hopefully after retirement), it seems like
    an IRA created with 401k money would be taxed differently from
    an IRA created with regular income. 
    
    Money put into an IRA is not longer tax-deductable, right?
    
    BL
    

    The 401(k) money to be rolled into an IRA is taxed as ordinary income
    in the year you get it. It Then has to go into an IRA. Is that right?
    
    Ken

re last two...

You can contribute $2k/yr to an IRA. Depending upon your income level and 
some other factors (company offers pension plan), some or all of your 
contribution may be deductible from current income (i.e., untaxed in the 
year contributed). Suppose, all factors considered, you are entitled to a 
deductible IRA contribution of $800. You make a $2000 contribution...

That contribution is made up of an untaxed $800 and an already-taxed $1200. 
You have to keep track of the amount in your IRA which has already been 
taxed (your basis) and that which hasn't been taxed (deductible 
contributions and interest/dividends/etc). You do this with a Form 8606 
attached to your 1040 each year. This record-keeping is solely your 
responsibility.  When withdrawals begin after age 55.5, only the money not 
previously taxed is taxed as current income.

Money contributed to a 401(k) has not yet been taxed. If rolled over to an 
IRA, it is treated on withdrawal exactly like the non-basis portion of your 
IRA withdrawals.


>     Money put into an IRA is not longer tax-deductable, right?

Wrong (often). Its deductibility depends on a number of factors, including 
income level, filing status, and whether or not your company offers a 
pension plan (DEC does).


>     The 401(k) money to be rolled into an IRA is taxed as ordinary income
>     in the year you get it. It Then has to go into an IRA. Is that right?

Only if you're stupid ;^)

If the funds being transferred don't pass through your control, there is no 
tax until the money is withdrawn from the IRA. You should check with the 
custodian of your IRA to see how the 401(k) check should be made out -- if 
it's made out to you, you'll pay: 20% withholding before you even get the 
check (which can be recovered when you file your tax return for that year). 
If you fail to roll over the funds within the allowed 60 days, only then is 
the 401(k) withdrawal taxed as ordinary income (20% already withheld) and an 
additional 10% early-withdrawal penalty is assessed (paid when you file your 
tax return).

Generally, you'll want the check made out to the IRA custodian, or directly 
transferred from your 401(k) account to your IRA. Then there is no current 
withholding or tax liability.

    .7�responsibility.  When withdrawals begin after age 55.5, only the money not 
                                                         ^^^^

    
    Sounds like this form 8606 is the missing piece of the puzzle, 
    albeit keeping such records straight for 25+ years is somewhat
    scary. But it sounds like a 401K rollover is simple, since the default
    assumption of the IRS (that the input money was not taxed) would be
    correct. 
    
    Thanks for the info,
    Bill
    

      There may be some advantage to rolling the proceeds of a 401K plan
      into a separate IRA  account,  rather  than  co-mingling  it  with
      "regular"  IRA funds in a single IRA account.  My understanding is
      that if you keep the 401K funds in a separate IRA account then you
      may be able at a future time to roll those funds into another 401K
      that you become eligible for.  If you become eligible for  a  401K
      that  provides better appreciation than your regular IRA you might
      want to do this.
      
      If  you  think  you should be concerned about this, please talk to
      someone who is more expert than I in this area.

    Does anyone know what paperwork is required on the Digital side?
    I sent my mutual fund company an application to rollover my 401K into
    an exisiting IRA.
    
    
    

    
    Assuming you're leaving Digital (because if you're not, you're out of
    luck), Digital Investor Services will mail you a packet in roughly 2
    weeks after you leave and ask you if you want to leave your money in
    the SAVE plan (assuming your SAVE proceeds are worth > $3500), Rollover
    the money into an IRA (a check made out to the company that will house
    your IRA, this is very important! The check will be mailed to you), or 
    receive the proceeds in the form of a check made out to you and mailed
    to you.  If your form is received by Investor Services by the 15th of
    the month they will then cash out your SAVE plan on the 1st of the
    following month and mail you a check on the 15th of that following
    month.
    
    If you need more information about this, feel free to send me mail with
    your mailstop or home address, I have some hardcopy information that I 
    can send you that spells out these options very nicely.
    
                   -- Phil
       

   � Assuming you're leaving Digital (because if you're not, you're out of
   � luck), Digital Investor Services will mail you a packet in roughly 2
  
    I am leaving
    �  weeks after you leave and ask you if you want to leave your money in
    �    the SAVE plan (assuming your SAVE proceeds are worth > $3500), Rollover
    Does this mean I can continue with SAVE at Digital even after I leave.
    
    �    the money into an IRA (a check made out to the company that will house
    �    your IRA, this is very important! The check will be mailed to you), or 
    �    receive the proceeds in the form of a check made out to you and mailed
    �    to you.  If your form is received by Investor Services by the 15th of
    �the month they will then cash out your SAVE plan on the 1st of the
    �    following month and mail you a check on the 15th of that following
    �    month.
    
    I want to avoid the 20% withholding and would like Digital to move the
    money directly into the mutual fund company holding the rest of my IRA
    funds. 
    
    Will digital honor the wishes of my mutual fund company?

    You could also roll the money out of the Digital 401(k) and into
    your new companies 401(k) if that option applies to your situation.

    
    Yes, if you have at least $3500 in SAVE you can leave it in SAVE.  I
    personally think you'd be crazy, since a Rollover IRA gives you alot
    better (and more) investment options.
    
    If Investor Services mails you a check made out to your IRA account
    custodian then the 20% withholding will not occur.  Make sure you send
    in the check within the 60 day time limit however.
    
    I'm not sure what Investor Services will do when they receive the
    request from your mutual fund company.  You might want to contact
    Investor Services (1-800-235-5069) to discuss this.  My hunch is that
    they may ignore the request.
    
                 -- Phil
    
    

    
    RE .14
    You could also roll the money from the SAVE plan to your new company's
    qualified plan (i.e.,401(k)) plan, if they allow it.  Check with your
    new employer first.
    
             -- Phil
    

I'm a little confused.  I thought this topic on 401K rollovers was about these
generic transactions.  It would be more helpful to more people if the discussion
about leaving DEC's SAVE place were moved to digital_investing.

Elaine

    
    If Investor Services receives a Transfer request from a mutual fund
    it has to honor it.  It's the law!!!