Q: I enjoyed your recent column on Roth IRAs. I’m looking into converting my 401(k) to a Roth in 2010 (when rules on adjusted gross income for Roth contributions will be eliminated). I am 66. Does the 5-year waiting period for withdrawing funds apply? – F.G., Palm Coast, FL

A: If you want to shift dollars from your 401(k) to a Roth, you’ll need to rollover the funds into the Roth and pay income taxes on that amount. Once you’ve done that, the 5-year waiting rule would apply before you could begin taking tax-free distributions.

If you have the option of rolling over funds into an existing Roth, the 5-year wait would be dated from the time you opened that account, notes Valerie Kupferschmidt, ERISA counsel at Hewitt Associates.

Q: I retired too early due to health problems. My income was greatly decreased, but I kept on and survived. I took my Social Security at age 62 and then, miraculously, I made a lot of money on a matter I’d been handling for a number of years. I now have the money to pay back Social Security. Can I do this and put off my retirement? I believe I could work enough from my office at home that I could make more than what Social Security pays me anyway. Is it possible to change your mind about early retirement and wait to draw Social Security at age 65 or 66? I was born in 1945. – L.O., Oklahoma City.

A: Yes, you can change your mind about drawing Social Security benefits, and in your case, it’s a very reasonable alternative. Contact the Social Security Administration and indicate that you want to withdraw your original application for benefits. You’ll also need to fill out Social Security form 521, which can be downloaded here. You will need to pay back the benefits you’ve earned to date.

Mary Jane Yarrington, a senior policy analyst with the National Committee to Preserve Social Security and Medicare, notes that withdrawing your application carries a big potential benefit: Assuming you do work until your Full Retirement Age–which in your case is 66–you’ll receive higher Social Security payments since you will have avoided the financial penalties of taking early benefits.

Q: I have a traditional IRA with a balance of $79,000. I’ll be 71 this fall. Will I be contacted by someone about the amount I need to take out each month? – C.C., Rio Rancho, New Mexico

A: Your financial institution should alert you to the minimum distribution requirements for your IRA. But in the end, it’s your responsibility. There are substantial IRS penalties if you don’t begin to withdraw the minimum amounts after you reach age 70-1/2. Your financial institution or accountant should be able to provide guidance on how much you need to withdraw; there’s also a very detailed page of information on this topic at the IRS website. There also are several good online calculators that can help you determine your minimum contribution; these include Kiplinger’s and Bankrate.com.

Q: What’s the easiest way to nail down all the fees in a mutual fund? Is there a website to get information on investing? – K.R., via the Internet

A: Mutual funds charge two main types of fees and expenses–sales loads and ongoing expenses. Sales loads are one-time fees paid directly by you when you buy shares (front-end load) or when you sell (back-end load). Ongoing fund expenses cover things like portfolio management and fund administration; these are paid from fund assets, so investors pay them indirectly.

The best and most reliable way to understand a fund’s fees is to look at the fee table published at the front of a fund’s prospectus. You can get a prospectus from the fund company, and in many cases you can download this document directly from the company’s website.

Tags | 401(k), IRA, long-term care, Q&A