Greetings, Zero, and welcome. You wrote:<<After taking many "foolish" steps, one by one, over the last 7 months, I decided (after rolling over an old 403b into a Vanguard Traditional IRA) to CONSIDER/research the possibility of a 2nd rollover of $4,000 from the new Vanguard Traditional IRA to a self-directed Roth ($2,000 for 1998 and $2,000 for 1999). I understand that I would have to pay 10% taxes on this money to do so but no penalty since it would be a rollover. I know I have passed the deadline for having the tax on the "1998 contribution" be spread out over several year. >>That is correct. Your rollover of the 403b money to a traditional IRA and a subsequent conversion of those monies to a Roth IRA has no impact on your ability to make an annual contribution to a traditional or a Roth IRA. You may rollover an unlimited sum from IRAs and qualified retirement plans like a 403b. Contributions are a different topic entirely.Incidentally, the income taxes due on a conversion of a traditional IRA to a Roth IRA are not 10%. Generally speaking, that money is taxed at the marginal rate (i.e., 15%, 28%, 31%, etc.) your taxable income places you in for the year of conversion. Indeed, if the IRA is large enough, it could even throw you into a higher tax bracket for the year.<<He told me I could convert the entire amount in my new "Custodial" Traditional IRA -- not just the $4,000 I was considering -- to the Roth if I wanted to and still make a cash contribution of $2,000 for 1998 and a cash contribution of $2,000 for 1999. >>Assuming you have made no other conributions to an IRA (other than the rollover) for 1998 or 1999, then that statement is also correct. You do, though, have to meet the Adjusted Gross Income limits for Roth IRA contributions. The limits exclude the income arising from the conversion. To make the full contribution for both years, your AGI must be $95K or less as a single filer and $150K or less as a joint filer.Regards....Pixy
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