There are two types of traditional IRAs, rollover and contributary. The rollover IRA is used to transfer your lump sums from retirement plans so you don't get hit with taxes. The rollover IRA also has the distinction that you can then roll that money into a new employers retirement plan, if you were unFoolish. The contributary IRA is the one you set up and contribute to @ $2000/year.

I have never seen any rules that say you can't contribute to your rolloever IRA. The rules do say that if you do, you can't roll any of the money to your new employer.

Consequently, I would do exactly what your broker suggested. Additionally, if you want to make it easier on him and yourself, open the rollover IRA with a money market fund or an s&p500 index fund, using a different company. Then transfer that money to your Roth IRA.

Zev