traditional IRA versus Roth

Hi Kubbard,

This is a difficult question since there are a lot of variables that affect what the right path is, such as:
- Are you prepared to pay the taxes today on the rollover if you roll into a traditional IRA and then convert that to a Roth IRA (which is how you would get into a Roth IRA). With a Roth IRA you pay taxes today and then you don't have to pay them on distributions later vs. with a traditional IRA you can avoid paying taxes today but you'll pay them later once you start taking distributions (and there are rules about when you have to start taking distribution).
- your tax situation, how old you are, what other investments you have, what your income will look like going forward and many others

In many cases choosing a Roth IRA vs. a Traditional IRA largely depends on whether your taxes are likely to be higher in the future (in which case a Roth IRA is better) or lower in the future (in which case a conventional IRA is better).

Your best bet may be to ask a certified fee only financial advisor and/or check with a representative of the firm that is currently managing your 401K.

If you want to connect with an advisor you can inquire to chat with someone here: https://www.newretirement.com/Services/Professional_Financial_Advisors.aspx

Here are some additional resources on this question:
http://en.wikipedia.org/wiki/401%28k%29_IRA_matrix
http://en.wikipedia.org/wiki/Roth_IRA

Good comments for silversufer but also keep in mind if you convert to a Roth you will pay taxes which means you will lose buying power (you'll have less money to buy investments with). Also remember that a traditional IRA requires you to begin taking Required Minimum Distributions at the age of 70.5, the Roth does not require RMD's.

If you are taking income from your IRA right away you may want to consider an annuity product. Many annuities can provide an income stream for the rest of both your lives regardless of the account balance and without giving up control your asset. This is important because RMD's go up each year (RMD's are about 5% the first year). An annuity can be used with both a Traditional and a Roth IRA, however, this varys by company.

Everyone's income needs are different in retirement and there are hundreds of variables to consider. You should think about meeting with a professional planner who specializes in retirement.