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Subject:  Re: Roth Date:  9/3/1999  3:41 PM
Author:  TMFPixy Number:  13642 of 104850

Greetings, Ann Marie, and welcome. You wrote:

<<I will have qualifying w-2 and 1099 income this year. I do not have a current retirement plan.

I want to set up a SEP, a qualified IRA, and a non-deductible ROTH. Can I do this?>>

Yes, but with some caveats. The SEP-IRA can be used to contribute up to an effective 13.0435% of your comensation or $24K, whichever is less. You may also contribute to either or both a traditional IRA or a Roth IRA. The contribution to a traditional IRA may or may not be deductible depending on your filing status and adjusted gross income. (See our IRA area at for these limits.) A contribution to a Roth depends on your filing status and AGI as well. If all you can make is a nondeductible contribution to an IRA because of the SEP, then the Roth is generally your best choice. If you decide to contribute to both a Roth and a traditional IRA, then you may not contribute more than $2K combined to both ($1K to each, Or $1 to one and $1,999 to the other.)

<<Can I contribute to the non-deductible Roth with stocks at their original purchase basis and then trade in this account to avoid taxes for the year of the trade?>>

No, you may not contribute anything but cash to an IRA, regardless if that's a Roth IRA or a traditional IRA.

<<Can I over contribute to the non-deductible Roth in order to avoid paying taxes on stock sales?>>

No, you may not. Excess contributions incur a 6% penalty per year each and every year until they are removed from the IRA.


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