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<<This is a 2 parter: I've already put 1000 so far this year into my regular IRA. But, I'm switching to a ROTH IRA now. Can I still put 2k in the Roth IRA? or just 1000?

Also.. If I roll my old IRA money.. (about 5,000) into my ROTH IRA, will it be taxed when I take it out?>>

If you have already contributed $1K to a traditional IRA for 1998, then all you may contribute to a Roth for the remainder of 1998 is another $1K. The maximum allowable annual contribution limit to traditional and Roth IRAs in any one year is $2K in the aggregate, not $2K to each.

If you convert your traditional IRA to a Roth IRA, then all previously untaxed money in the traditional IRA will be taxed (but not penalized) as a result of that conversion. You may spread the income reportable on that conversion equally over the next four years if you convert by 12/31/98. That could reduce your tax burden this year if you elect to do so, but the remaining undeclared income may increase your taxes over the succeeding three years because it still must be declared and you will pay taxes based on the rates in effect in those years.


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