Can I "rollover" my tax shelter to a mutual fund when I am 59 1/2?

Answer 1

At age 59 1/2, withdrawals can be made from many tax sheltered accounts, such as IRA's, "without penalty". However, depending on the type of account, there may be taxes due ( in this case taxes are technically not called a penalty). With a Roth IRA, there is no tax due on withdrawals and you can reinvest the funds wherever you like. With a traditional IRA, tax is due on the withdrawals. Also, your" tax shelter" may already be in a mutual fund. If you are wanting to move your tax sheltered funds from one investment to another, it is possible to do that in many cases even before age 59 1/2.

Answer 2

You can, but why would you want to? Your retirement fund will continue to earn $$$ without tax until you withdraw it. If you roll the whole thing into an ordinary mutual fund all at once, you'll have to pay tax on the whole thing AND the subsequent income would be taxed every year even if you didn't withdraw it.

If you are in a situation where you must withdraw more than you actually need, dumping the excess in a relatively low risk mutual fund would be a good idea, however.