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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 75539  
Subject: Re: yet another Roth ? Date: 1/5/1998 7:28 PM
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JimTitus,

<<... you will be able to convert (rollover) an existing IRA into a Roth AND make a $2K contribution to a Roth as well. They are separate transactions and rollovers of IRAs never count as part of an annual contribution to an IRA.

I think it would be better to do (2) first, and then (1), because then you will be able to have all of the money in the same account and avoid the extra $10 custodial fee. (See "another Roth Question") Only problem: if fund charges a load (or equivalent) for conversion. I have an email into Vanguard to see if they charge their upfront quasi-loads for conversion.>>

The pending technical corrections already passed by the House and retroactive to 1/1/98 may will affect the order of withdrawals in Roth IRA that have conversion money and annual contributions mixed together. It will presume an order of withdrawal of 1998 conversions first, 1999 and later conversions next, and annual contributions last. If you want to take money out before age 59 1/2 and before five years have passed since conversion, the penalties can get stiff. The IRS is recommending and many Roth providers are demanding these accounts be held separately. That means it's best to have annual contributions in one account, 1998 conversions in another, and 1999 conversions in a third. Convert in later years, and each should be in a separate account as well. Makes it easier to trace the source of money deposits that way.

Regards.....Pixy

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