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1. Am I going to have to pay any taxes on the $2K Roth IRA Conversion by prorating the $2K
non-deductible account with the $20K deductible account that already existed? In other words, is
90% of that conversion
actually taxable, even though it was from a non-deductible account?

The $2K you "converted" to a Conversion Roth IRA is non-deductible--you need to pay taxes. If you took it as a deduction since you started it out as a Traditional IRA, then you have to pay that deduction back to Uncle Sam. Since you started the Roth early, you can spread those taxes out over the next 4 years equally or just pay it all off on your 1998 Tax Return.

2. The Roth IRA account is actually identified as a Conversion account in title. Does this carry any
significance or implications that should make me think twice about adding "new money" to the
account? In other words, do I need to open another regular Roth IRA to fund with "new money"?

For right now, a Conversion IRA is a separate, "closed" account once made meaning that you cannot contribute to it, but must start a SEPARATE CONTRIBUTORY Roth IRA for further contributions. You shouldn't have gone through that "Conversion" process, basically--but I hear there is legislation under way to allow us to meld the converion Roths and Contributory Roths into one account--so be patient and it will all work out--but don't forget to pay Uncle Sam his due!!

Hope this helps!

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