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Subject:  Re: Roth IRA, WHEN? Date:  1/22/1998  10:52 AM
Author:  TMFTaxes Number:  1436 of 127613

[[Roy, After receiving my W2, I noticed that a military officer is considered (for tax purposes) a
pension plan participant? So I reviewed the Armed Forces IRS Pub and sure enough this is the
case. In June I opended a traditional IRA, and maximized my 97 contribution. 1) Is that
contribution non-deductible because I do not itemize or becuase I am considered to have a pension

It is possible that your regular IRA contribution is non-deductible, but that will be based upon your Adjusted Gross Income level...and nothing else. If you are covered by a pension plan, IRA deductiblity depends upon your AGI. If you are a single person, with AGI greater than $25k, your regular IRA deduction will be limited. If your AGI is greater than $35k, your regular IRA will be completely non-deductible. For additional information on regular IRAs, check out IRS Publication 590 at the IRS web site.

[[ 2) When I phoned the company which handles my IRA about conversion, they stated I would
have to open a Roth under a distinctly separate account, however I could contribute to either
account or both but not to exceed 2K. Your post contridicts this by saying I can only contribute to
one in any tax year. Am I understanding correctly that I can maintain both a traditional and Roth
version and is 98 the only year I can role this a non-roth to a roth?]]

Well, I wasn't there when you called your broker. But I can tell you (and, I believe, the post also notes) that you have only $2k to deal with. It can ALL go to a regular IRA. Or it can ALL go to a Roth IRA. Or it can be split up between a regular IRA and a Roth IRA. The decision is yours regarding annual $2k contributions.

Finally, you can (assuming you otherwise qualify) to rollover your regular IRA to a Roth IRA in any year beginning in 1998. But rollovers that take place in a year AFTER 1998 will not be allowed the special "break" to spread the taxable income over a 4 year period.

TMF Taxes

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