by KYW's Salil Gutt
Employees leaving their companies have to make an election about their retirement plan monies. The smartest thing to do is to rollover money from 401k, 403b or a governmental 457 plan to an IRA or another qualified retirement plan. There is a new option from the IRS.
If your plan permits, you can now rollover assets directly from a company retirement plan to a Roth IRA. Earlier there was an interim step of first transferring to a traditional IRA.
This rollover to a Roth IRA is still a taxable transaction. The entire amount rolled over is taxable except for after tax contributions made to the plan. Income tests also apply for eligibility to do the Roth. Your adjusted gross income must be less than $100,000. However, there is a loophole. If you wait to convert until 2010 then no income tests apply for transfers made in that calendar year only. And, you get to spread out the tax payments equally over the following two years.
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