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Author: TMFPixy Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 79721  
Subject: Re: IRA Account Types and Contributions Date: 3/19/2000 10:40 AM
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Greetings, Choz, and welcome. You wrote:

<<Here's my situation:
After changing jobs in '94, I rolled my 401K into an IRA. I didn't make any contributions to this account. In '98 I converted my rollover account into a Roth IRA. My brokerage gave me a new account number for the Roth and a small amount of interest ($19) accrued in the old account after the conversion. So now I have two accounts, a rollover IRA with $19 and a Roth IRA with much more. :-)

I was able to make a contribution to the Roth for '98, but for '99 my AGI is over $95K (I'm single) so I can't make a contribution to the Roth for last tax year and I'm quite sure I'll be in the same boat for this year.>>

Well, that's not quite true. You may still make a partial contribution until your AGI exceeds $110K. See IRS Publication 590 (Individual Retirement Arrangements) available for download at http://www.irs.ustreas.gov/prod/forms_pubs/index.html.

<<So, here are the questions-
First, there's nothing magical about my old rollover account, right? I should now be able to use this account as a non-deductible IRA.>>

Correct. The $19 still in there is hardly worth worrying about for a future transfer to a new employer's plan.

<<Second, I should be able to make a $2K non-deductible contribution for 1999 and another $2K non-deductible contribution for 2000 right now, correct?>>

That's also correct. BUT -- Why not take advantage of the Roth to its fullest extent first, and put any remaining part of the $2K in the traditional? That way you still get some advantage for later tax-free withdrawals of earnings.

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