I'm 65 and retiring from my State of California employment. I currently have an employer sponsored 401k with 120k and a 479b with 80k. My options are to leave the $ in the current acct, rollover the $ to a Fidelity IRA (with many more investment options than the employer plan), or convert the4 into my Fidelity Roth IRA. Leaving my $ where they are is not an option for me. Of the remaining choices (from what I've read), if I convert the $ to my Roth IRA, the $200k is considered ordinary income and would dequalify me for my $7500 yearly contribution that I've already contributed to the account and would need to be withdrawn along with any interest (and I would need to pay income tax on the deposit. My other option is to rollover the $ to a traditional IRA (and pay no tax right now), and then convert the traditional IRA in to my existing Roth IRA (and still pay the income tax at a lower tax bracket, since theoretically my income will be less). Does this sound like I've considered al the tax ramifications correctly?
Also, in regrad to the "5 year rule" for Roth IRA contributions, does this apply to conversion contributions? And does the 5 year clock reset every time I make a contribution?
Thanks to anyone who can provide any info!
