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p8ntbal writes (in part):

Question: I have the option to still put in my 2k or 3k for 2001 and also reduce my taxable income saving me another $600 in gains on my return. Should I throw another 3k into the growth fund thinking it's better to fund the losers and hope the market returns a gain over the LONG haul. Am I still in good shape because I never sold my shares and even though I lost money I will gain that much more if it goes up?

Should I switch my ROTH to another fund?

I reply:

I think I speak for most of us here at the Tax Strategies Board when I answer your questions with a resounding "I don't know." No one knows what the market will do today, tomorrow, next week, or next year. We know what it's done in the past, and to an extent, many of us are willing to bet that it will continue that behavior, at least in the long term, in the foreseeable future. But whether you're willing to take that risk is entirely your decision.

There are, though, a couple of tax-related points that need to be made in light of your discussion. First, the contribution limit for 2001 is only $2,000. If you decide to throw $3,000 into your Roth, be sure to designate at least $1,000 of that money as a 2002 contribution, preferably by writing a second check. Second, Roth contributions are not tax deductible. Not a penny. So placing money in your Roth IRA won't reduce your taxable income at all. --Bob
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