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I began 1999 so Foolishly, depositing $4000 into a Roth IRA (1998 and 1999 Contributions). Investing in the Foolish 4, the account grew approx. 25% in 1999.

To start 2000, I added a new Roth IRA contribution ($2000 for 2000). Of course, the Dow has done poorly of late, so the account is down about 10% now for 2000.

As I prepare my taxes, I realize that my contribution for 1999 is not allowed! What do I do, since I have to withdraw the original 2000 + earnings. How do I divide it up?

One idea: Even split. Divide the account into thirds, and recharacterize one third as representative of the 1999 contribution. Problem: doesn't really account for the fact that the FY2000 money is brand new.

Another idea: Estimate total months in IRA for the three contributions, and withdraw a proportional amount for 1999 (14 months worth).

Does the IRS say how to do this? I will likely be able to make contributions and do conversions in 2000. Would it be easier to just recharacterize the entire IRA in 2000, then reconvert to a Roth IRA later in the year? Is this still allowed.

Thanks in advance for all the help. Since I don't always navigate these boards well, I would appreciate copying any response to

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