Function

• If you have money in a qualified retirement account invested in a mutual fund, you can roll that money into a Roth IRA, because you are moving the money from one qualified retirement plan to another.
  
  

Considerations

• If you move money from a tax-deferred retirement account, such as a traditional IRA or 401(k), you must include the amount of tax-deferred contributions and earnings as part of your taxable income on your tax return for the year.
  
  

Warning

• If you attempt to move money from mutual funds not in a qualified retirement plan into your Roth IRA, the money will be counted as contributions. If the amount exceeds the annual contribution limit, which equals $5,000 ($6,000 if you are 50 or older) as of 2010, you will have to pay a 6 percent excess contributions penalty until you correct the problem.