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Subject:  Re: Straightening out my IRA setup mess Date:  2/24/2001  7:19 AM
Author:  TMFPixy Number:  28083 of 88520

Greetings, Dreamseason, and welcome. You asked:

I already filed my 2000 tax return based on the assumption that I would put the max $2000 into a Roth IRA. Since it went into a traditional IRA account and now it's being "converted" to a Roth, will I have to pay taxes on it despite not reporting a Traditional IRA contribution as a deduction? I'm hoping that I can avoid anymore paperwork=headaches.

Go back to Datek and tell that agency you do NOT have to do a conversion. Instead, you should do a recharacterization to reflect the contribution you made initially was meant for a Roth and not a traditional IRA. For details on how to do a recharacterization, see page 42 of IRS Publication 590 (Individual Retirement Arrangements) for details. You can download that missive at . Also, there's no hurry as you have until October 15, 2001, to complete the action. When the recharacterization is complete, you will have no problems.

Be aware that Datek clerks may not be knowledgeable in this area. If you get one who is not, be persistent and demand to speak to a supervisor until you receive satisfaction. From what I've seen on the boards (I have no account there), Datek's customer service and knowledge level is not too high. As I said, just be persistent.


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