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Author: MrLee One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121333  
Subject: Roth IRA Post-Conversion question Date: 4/8/1998 2:24 PM
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I've converted my IRA to a Roth IRA this year. The Roth IRA is with a mutual fund company. Now that the converstion has taken place they tell me that I can not contribute to this particular account anymore (IRS Rule it seems). They say that I need to open a new Roth IRA . This seems a little bogus to me but, is it the gov't. or the mutual fund company?

Has anyone else run into this little problem yet?

Lee
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Author: FoolishFlyer Three stars, 500 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 3348 of 121333
Subject: Re: Roth IRA Post-Conversion question Date: 4/8/1998 3:17 PM
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<< This seems a little bogus to me but, is it the gov't. or the mutual fund company? >>

Oh, if it only was bogus.

It's true. Until the IRS/government ties up some loose ends regarding comingling of Roth conversion money and subsequent annual contributions (has to do with which money can be withdrawn in five years without penalty), the IRS has *recommended* (not mandated) that annual contributions to the Roth IRA be kept separate from monies that were converted to the Roth.

Almost everyone offering Roth IRA's (brokers, banks, mutual funds) have taken this recommendation to heart (some would say they are being overcautious). I guess they don't want to be sued for misinforming their customers.

Dave

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Author: KATinChicagoland Three stars, 500 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 3355 of 121333
Subject: Re: Roth IRA Post-Conversion question Date: 4/8/1998 5:45 PM
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<<I've converted my IRA to a Roth IRA this year. The Roth IRA is with a mutual fund company. Now that the converstion has taken place they tell me that I can not contribute to this particular account anymore (IRS Rule it seems). They say that I need to open a new Roth IRA . This seems a little bogus to me but, is it the gov't. or the mutual fund company?>>

It's almost certain at this point that there will be no need to keep rollover contributions and non-rollover contributions in separate Roth IRA accounts. And it never was a requirement, only a recommendation. But until Congress finishes work on the technical corrections act you may have difficulty convincing your IRA provider of that fact. For details visit my web site and look for the page on Roth IRA technical corrections.

KAT in Chicagoland
http://www.fairmark.com
Tax Guide for Investors
Includes the latest information on
Roth IRA technical corrections


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