Traditional / Roth 401(k)

Question. At the beginnng of this year I stopped funding my regular 401(k) and started funding a new Roth 401(k) that my company began to offer. Now, I have some money sitting in the regular 401(k). Can I roll this into a traditional IRA I already have even though I still work for the company. I know I could if I quite but I kinda like the job so I'm going to stay.

 

Probably not. You should check with the plan adminstrator or your HR department first. Sometimes there are some distribution options when you are still employed. Typically however, the money has to stay as long as you still work there.

 

Thanks, that's what I was thinking. I just hate for that money to just sit there. As with most 401(k) plans, the investement options aren't all that great and I could find better ones elsewhere.

 

Most traditional 401K plans are adding targeted retirement funds. I would move it all into one of those...you know like a 2035 or 2040 fund where it will be activelly managed for you.

Personally I would dump just enough into the Roth 401 to get the match and put what is left over in the traditional. You need to maintain the future tax diversity.

 

So you'd put what's left over into a traditional and not a Roth IRA. I was thinking lower retirement time tax bracket.

 

Roth is best if you will be in a higher bracket come retirement time.

But you really can't know what taxes will do so it is best to diversify.