Expert: Allen - 2/11/2007

Question
I just resigned from my last job where I had both 401K plan as well as Cash Balance Pension Plan. I just turned 52 year.

1. 401K - My 401K plan has both before Tax and after tax contribution.
2. Cash Balance Plan - I am eligible to take my Cash Balance Plan Pension as a lump sum.

I already have Rollover IRA from my job 18 years back when I rolled over my 401K from that employer to Rollover IRA.

My questions are -
1. If I want to rollover my current 401K, do I have to open new Rollover IRA?
2. Do I have to open two separate Rollover IRA to keep after tax and before tax contribution separate?
3. Can I rollover my Cash Balance Pension to IRA? If yes, do I have to have separate Rollover IRA from above?

Thank you for your advise


Answer
General response to your questions is that you can commingle all assets in a single IRA. Specific answers:
1. No.
2. You can roll over to existing IRA. However, make certain the financial institution has the ability to track what is known as your basis (the amount of the after tax contributions before earnings). If they can't you should maintain a record of your after tax contributions. It would be best if it's on a form prepared by someone other than you. You will need this when you take a distribution from the IRA. This way you will be able to explain to the IRS why you don't owe tax on the portion of your distribution which is a return of your after tax contributions.
3. Yes. No.