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Subject:  Re: IRA and 401K Eligibility Date:  6/6/1997  1:16 PM
Author:  DOKipp Number:  43 of 98937

Here is some basic information:

You can contibute $2000 into your IRA for 1997 in addition to any money transferred from your 401(k). Moving money from a 401(k) account into an IRA is called a rollover and doesn't affect the deductibility of your other contributions.

The fraction of this $2000 which is tax deductible depends on your income and whether or not you were covered by a retirement plan. There is a reasonably clear chart in the IRS instructions for form 1040 to help figure this out. Of course even if it's not tax deductible up front, the earnings on it are tax-deferred, making it a good idea for most people to put in the full $2000.

One other important point: If you eventually want to tranfer the accumulated savings from your old employer's 401(k) into your new employer's 401(k), DO NOT mix the money with your regular IRA savings in the same account. Set up a separate IRA account (called a rollover or conduit IRA).
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