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I've been reading quite a bit about the Roth IRA setup and understand the contribution rules for the most part, but one answer (clarification?) still eludes me: If you are not starting the Roth IRA with money from a traditional IRA conversion, how much can you put in the account when you start it?

I'm not clear on whether an 'initial' contribution is the same as that year's 'annual' contribution. Or, would it be analagous to opening a brokerage account (which theoretically have no upper limit) and then converting that account to a Roth IRA?

Any Foolish enlightenment on this issue would be helpful.
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Greetings, GreggN, and welcome. You asked:

<<I've been reading quite a bit about the Roth IRA setup and understand the contribution rules for the most part, but one answer (clarification?) still eludes me: If you are not starting the Roth IRA with money from a traditional IRA conversion, how much can you put in the account when you start it?>>

If you have the earned income to do so, then you may contribute up to the maximum $2K for the year on opening the account.

<<I'm not clear on whether an 'initial' contribution is the same as that year's 'annual' contribution. Or, would it be analagous to opening a brokerage account (which theoretically have no upper limit) and then converting that account to a Roth IRA?>>

If you intially contribute the full $2K allowable for the year, then that's the same as the "annual" contribution. If you initially contribute less than $2K, then that becomes the annual contribution only if you elect not to contribute more to use up the full $2K that's allowed for the year.

Regards..Pixy
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The initial contribution to an IRA -- one that is not a conversion from traditional to Roth -- is just the first sum of money deposited. The importance of it for a Roth is the date, not the amount.

The minimum amount of the initial contribution is determined by the IRA provider. In other words, it's the minimum amount to open or maintain an account.

Ordinarily the maximum amount is the same as the maximum that you are allowed to deposit per year. That is $2,000, or the amount of your qualifying income, whichever is less.

Between January 1 and April 15, however, if you did not max out your IRA contributions the year before, it is possible to contribute for two years at once, so that the effective maximum is $4,000.

It is not analogous to opening a brokerage account and converting it to a Roth IRA, because you cannot do that. A new Roth IRA must be opened specifically as a Roth IRA (do not use the brokerage's regular account application form).
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If I contribute $2000 to my newly created Roth IRA then choose a stock plus commission equally less then $2000 I have a balance in the money market.

1. when can I use that to purchase more stock
2. if my $2000 has already earned interest before I purchased stock how much of the 2005 total can I use for purchasing.

Hopefully this will add more information to the original post.

Steve G.
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SGallimore writes:

If I contribute $2000 to my newly created Roth IRA then choose a stock plus commission equally less then $2000 I have a balance in the money market.

1. when can I use that to purchase more stock
2. if my $2000 has already earned interest before I purchased stock how much of the 2005 total can I use for purchasing.


I reply:

The answer to your questions is, "As much as you want, whenever you want to." Once you have your $2000 contribution safely tucked away within your IRA, you may (with a few exceptions) invest it and its earnings as you please when you please, and trade as often as you like (until commissions grind you down to $0, anyway). --Bob
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You can use anything that's in there to buy stock. Let's say you put in $2,000 and it doubled. Well, you could use all $4,000 in there to do what you want. You're only limited to contributing $2,000 per year into there. What you do after that is your business.
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