Question about 401k Rollovers

[29ash]

If I rollover my 401k into a traditional IRA in 2011, can I convert part or all of the funds in the traditional IRA to a Roth IRA in the same year (2011) or would I have to wait until 2012 to do that? The reasons I want to rollover into a traditional first and then convert to Roth are (1) rolling over the whole balance to Roth may move me into the next tax bracket in 2011 and (2) may not be able to take the tax hit all at once. I'd like to wait towards the end of 2011 to make that assessment.

And one last question- I know the contribution max per year for IRAs is $5k. But do conversions count towards that contribution? For example, if I opened a Roth IRA in 2011 and made a $5k contribution, would I be unable to convert any additional dollars from the traditional IRA?

[disneysteve]

You can rollover to a traditional IRA and then immediately convert to a Roth. You don't have to wait a year.

Rollovers and conversions do not count toward your $5,000 annual contribution.