1. Am I going to have to pay any taxes on the $2K Roth IRA Conversion by prorating the $2K non-deductible account with the $20K deductible account that already existed? In other words, is 90% of that conversion actually taxable, even though it was from a non-deductible account?The $2K you "converted" to a Conversion Roth IRA is non-deductible--you need to pay taxes. If you took it as a deduction since you started it out as a Traditional IRA, then you have to pay that deduction back to Uncle Sam. Since you started the Roth early, you can spread those taxes out over the next 4 years equally or just pay it all off on your 1998 Tax Return. 2. The Roth IRA account is actually identified as a Conversion account in title. Does this carry any significance or implications that should make me think twice about adding "new money" to the account? In other words, do I need to open another regular Roth IRA to fund with "new money"?For right now, a Conversion IRA is a separate, "closed" account once made meaning that you cannot contribute to it, but must start a SEPARATE CONTRIBUTORY Roth IRA for further contributions. You shouldn't have gone through that "Conversion" process, basically--but I hear there is legislation under way to allow us to meld the converion Roths and Contributory Roths into one account--so be patient and it will all work out--but don't forget to pay Uncle Sam his due!!Hope this helps!Mac
Best Of |
Favorites & Replies |
Start a New Board |
My Fool |
BATS data provided in real-time. NYSE, NASDAQ and NYSEMKT data delayed 15 minutes.
Real-Time prices provided by BATS. M