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<<I contatced Ameritrade about this, and their reply indicated to me that after I roll the account over to a Roth IRA a) I can no longer make contributions to it (ie. I would hae to set up a new account to which I can make further contributions), b) the two accounts can never be combined, and c) I would have to pay taxes on
the full distribution, even though I was funding an IRA with the distribution.>>

a) This was an IRS recommendation, not a requirement. Each broker or mutual fund is handling it in their own way. Vanguard already told me that contributions to a rollover would be no problem. The technical corrections are supposed to change all of this, but it doesn't mean that Ameritrade will change it's policy in time for you. However, please remember that you can still set up the deductible traditional IRA before April 15th and deal with the rollover issue at a later date (after the tech corrections are final).

b) Basically the same answer as above, same reasons. Although, most brokers/mutual funds are allowing combinations after five years. Check out KAT's web site for the full scoop on the tech corrections (as well as other IRA issues).

http://www.fairmark.com/

c) Yes, because contributions to a Roth are not deductible. Therefore, rollovers that were deductible under a traditional IRA must be taxed. The advantage to doing what you want to do is that the tax on the rollover can be spread over four years, starting with 1998. This at least gets you out of the tax for 1997 and then spreads the pain out.
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