Question: My wife will soon lose her job after several years working in non-profit. I am confident in her ability to find another job, but in the meantime, we have been told that she will have to take money out of her 403(b), totaling about $45,000. What should we do with it? Roth IRA? Something I don't know about? James, Louisville, KY

Answer: What I would do is put the money into a rollover IRA. The money will be under your control and you can decide where to invest the money. So, the first thing to do is investigate which financial institution you want to put the money into.

You want to make sure that it's an institution-to-institution transfer into the rollover IRA. It's a simple way to preserve its tax-sheltered status. It has gotten easier over the years to make the transfer. I would check with the human resources folks at her soon-to-be-former employer for the company procedure to follow when transferring the money. You'll also want to check the rules of the financial institution into which the money is going.

The question of whether to roll the money over into a traditional IRA or a Roth IRA takes research to answer. However, for most people, there is a simple two-step test. First, do you have other savings available to you to pay the tax bill on the Roth rollover? You'll have to pay taxes on the rollover, since you're going from a retirement-savings plan funded with pre-tax dollars to one funded with after-tax dollars. You don't want to tap into the pre-tax retirement money to pay the tax.

Second, you need to decide whether paying taxes upfront is the best use of your savings at the moment -- compared to, say, maintaining a flush emergency savings account. Your wife is losing her job, and though you're confident she will get another, how long will it take? In the current economic environment, an adequate savings cushion is critical. I've found that it's usually simpler and easier to roll over into a traditional IRA, especially at a time when most people are pressed for savings.

Still, assuming you have sufficient savings and you decide a rollover into a Roth is a good move for you, the argument for the Roth strengthens the longer your money compounds before retirement. You can play with the numbers about the impact of going from a pre-tax retirement into a Roth at You can also check out the retirement calculators at

Follow Chris Farrell at @cfarrellecon