Bob Maloney, MSFS, AEP, MSFS, AEP
@napfabob
This is a good question and can go in a number of directions. If you roll to a traditional IRA account, you will avoid any income tax and penalties that would be attributable to any one under the age of 59 1/2. If you decide to roll it into a Roth IRA, the entire distribution of $7,000 will be taxable in the year it leaves the 401(k) plan. The good news is you can avoid the income tax by using the traditional IRA and once it's in the IRA, you can then decide in any one year or multiple years to convert a portion or all of it to a Roth IRA for the future. There are simply too many considerations to determine which is best at this point in time, but my recommendation would be to go with the traditional IRA and allow the funds to continue to accrue on a tax-deferred basis. I hope this helps and good luck.
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