UnThreaded | Threaded | Whole Thread (7) | Ignore Thread Prev | Next
Author: TMFPixy Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 75801  
Subject: Re: Multiple IRAs? Date: 11/30/1997 10:08 AM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 0
Greetings, YellowHammer, and welcome.

<<Question 1: is it legal to have multiple IRAs so long as you only contribute a total of $2K to them collectively per year?>>

Absolutely. It makes no difference if you have 2000 IRA and contribute $1 to each or just one IRA to which you contribute $2K. The controlling factor is the maximum annual contribution of $2K. That's the collective limit you may contribute to all IRA whether that contribution is fully deductible, partially deductible, or totally nondeductible in the year it is made.

<<Question 2: Assume I have an existing IRA and a 401(k). If I leave my company, can I rollover the 401(k) money into the existing IRA? If so, would this count toward my $2K yearly contribution?>>

When you leave your job, you may indeed transfer your 401k monies to an IRA without penalties or taxes. To avoid potential tax problems, if you want to do that you should see your benefits administrator to discuss the procedures for arranging a custodian-to-custodian transfer so you never touch the money. However, if you transfer the 401k money to an existing IRA, you will lose all eligibility to later transfer that sum and all its earnings to a future employer's 401k plan. Thus, you may want to read prior posts in this folder on this issue to obtain further information. A good start is to read those messages under the thread "How Does 401k Work?".

<<Final question: I know I can convert some or all of an existing standard IRA into a Roth IRA (paying the taxes, of course), but is it a one shot opportunity, or could I convert part now and part next year, and the rest later?>>

You can't do anything until at least January 1, 1998. That's the first date anyone may use a Roth IRA. But after that date you may roll all or part of existing IRA to the Roth, and you may do so in any and every year the Roth IRA option is available. Do so in 1998, and you must declare one-fourth of the amount rolled as income and pay taxes on that in each year from 1998 through 2001. Roll regular IRA monies to a Roth in 1999 or later, and you must claim the entire amount as income and pay taxes on that sum in the year it was rolled.

Regards......Pixy
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Print the post  
UnThreaded | Threaded | Whole Thread (7) | Ignore Thread Prev | Next

Announcements

The Retire Early Home Page
Discussion on accelerating retirement day.
Pencils of Promise - Back to School Drive
"Pencils of Promise works with communities across the globe to build schools and create programs that provide education opportunities for children."
Managing Your Wealth
Our own TMFHockeypop from Rule Your Retirement fame on the TV show Managing Your Wealth.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
Community Home
Speak Your Mind, Start Your Blog, Rate Your Stocks

Community Team Fools - who are those TMF's?
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and "#1 Media Company to Work For" (BusinessInsider 2011)! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.
Advertisement