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I'd like to take advantage of the new Roth IRA next year, and I was thinking that I could effectively
start off with a maximum of $4000 instead of $2000 by making a $2000 non-deductible IRA
contribution in 1997, then rolling over the non-deductible IRA into a new Roth IRA at the start of

Would this work? More than that, is this a smart move?>>

It MIGHT work. Remember that you can't designate an IRA contribution as "non-deductible". An IRA contribution is deductible unless circumstances make it non-deductible.

In your backround, you said that that you are covered by a qualified plan (401k). But that alone is not enough for a non-deductible. You would have to couple this with "excess" income. If you are single, and your AGI is more than 35k, you are over the limit for a deductible IRA. If you are married, that limit moves up to $50k.

So, if you are over the income limitations, you certainly could open a non-deductible IRA this year, and then roll it to a Roth in 1998 (assuming that you are under the $100k cut off for the Roth Rollover...which you say that you are in your backround information).

Is it the smart thing to do? That is really impossible for me to say, not knowing anything about you. But I can say that under the right circumstances, it really works out to be a very nice deal. I have a few clients that will probably run this same gambit, since it will make sense for them.

TMF Taxes

(Background: I'm under an employer-sponsored 401(k), so I'm not eligible to make deductible IRA
contributions. [Right?] I expect to be under the $95K AGI cutoff for Roth IRA eligibility in 1998. I
don't currently have an IRA, deductible or non-.)
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