Greetings, Jennifer, and welcome. You wrote:<<I have a variable income, so I don't know whether I will be eligible to add to my Roth IRA in 2000, but don't want to wait until year-end to get my $2000 into the market. Should I (1) open a traditional IRA (non-deductible for me anyway), then convert it later into my Roth if it turns out that I can (and if I do, can I take the earnings on the $2000 into the Roth also, and do I have to pay taxes on them even though they would have accumulated tax-free in either form of IRA?), or (2) put the $2000 into my Roth, then convert that contribution to a new traditional IRA at year-end if it turns out that I am not eligible for the Roth (and ditto the tax question on earnings accumulated)? I have been researching the pros and cons of each, but ultimately am just stumped. Why do the Roth IRA rules have to be so confusing? (rhetorical question) Thanks in advance for any guidance any of you can offer!>>You can do either, so take your choice. A contribution to either can be recharacterized as a contribution to the other as long as the recharacterization is completed by your tax filing date (normally April 15) for the tax year of the contribution. So, you can make the Roth contribution today. In January 2001, you see your AGI is too high for a Roth contribution in 2000, so you just recharacterize that contribution as one made to a traditional IRA and have the contribution and any earnings put into that traditional IRA. Your IRA provider can help you through this process if recharacterization is necessary.Regards..Pixy
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