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<<First, I have about $20K in a Traditional IRA account (all contributions were fully deductible). This year, I decided to take advantage of the Roth IRA. I do not want to have to pay taxes on that IRA, but to give the Roth IRA account a turbo start, I did the following. I opened a new Traditional IRA account (1997 tax year contribution of $2K, non-deductible) this year with a different custodian, then immediately
converted that account to a Roth IRA. That way, I still can add another $2K for this year. With 20-20 hindsight, I have some questions.

1. Am I going to have to pay any taxes on the $2K Roth IRA Conversion by prorating the $2K non-deductible account with the $20K deductible account that already existed? In other words, is 90% of that conversion
actually taxable, even though it was from a non-deductible account?>>

I'm afraid so. The page on my web site that explains all this is:

http://www.fairmark.com/rothira/jump.htm

If I remember right, the example I use is almost exactly the same as your facts.

<<2. The Roth IRA account is actually identified as a Conversion account in title. Does this carry any significance or implications that should make me think twice about adding "new money" to the account? In other words, do I need to open another regular Roth IRA to fund with "new money"?>>

There's almost certainly no significance to keeping new contributions separate, apart from the fact that some providers of Roth IRAs require it on the basis of a proposed version of the Technical Corrections Act that was not enacted. The full scoop on this is located at:

http://www.fairmark.com/rothira/tech.htm

Your result isn't what you planned but if it's any consolation, there's a good chance that in the long run you'll benefit from rolling the 1997 money into the Roth IRA if you can manage to pay the tax on that rollover without taking a nonqualifying distribution from an IRA.

I note that you're on AOL so I'll mention that much of my web site was recently dropped out of Excite, which means it also dropped out of AOL Netfind, but this was simply a glitch of some kind and we should be back in business there soon.

And I should acknowledge that Chris gave an excellent reply and say thanks for the nice plug.

KAT in Chicagoland
http://www.fairmark.com
Tax Guide for Investors
Includes the latest information on
Roth IRA technical corrections
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