Credit Advice

The 403B is basically a 401K for educators. Here is a break down of pros and cons between Roth and traditional 401Ks.    http://en.wikipedia.org/wiki/Roth_IRA

You need to put it in a pre-tax retirement account (e.g. traditional IRA / rollover IRA). If you put it in a Roth, you will owe income taxes.

Think of two separate transactions.  One transaction is to roll over your ex's 401k to a traditional IRA so that you don't have to pay taxes on it.  Start by establishing the account, then do a trustee to trustee transfer to avoid tax and penalties.  The exception is if you are getting cash from a Roth 401k, in which case you can make the transfer to the Roth IRA.   Once you do the transfer of the 401k to the IRA, you can convert some or all of the IRA to a Roth IRA.  You'll still need to pay taxes on the amount you convert, but you'll be able to control the timing. The other transaction is to establish a Roth IRA for future contributions.  That action is completely independent of rolling over your ex's 401k. In general, I prefer an IRA to a 403b, but if your plan has matching contributions from your school district, contribute enough to get the match, then use remaining funds in the budget to buy into the IRA.  If there is still money left over, you can contribute more to the 403b.  This all assumes you have an emergency fund and you don't have any silly debts laying around out there.  Then, I'd get the match, then pay off the debt as fast as possible before sending more money at retirement.

For some time I have been looking into rolling my QDRO 401k to an IRA and then placing a portion into the Roth over time in order to avoid higher tax brackets.  My issue is the 3.5-4% fee of the total 401 amount for which all of these financial advisors want to initally roll it over.