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Currently I hold two traditional IRA's. One is from the days when all IRA's were deductible to all taxpayers in the amount of $2000 per year. If I convert this IRA to a ROTH during 1998, I would owe taxes on the entire amount, spread over 4 years.

The second IRA is a non-deductible IRA. If I convert this IRA to a ROTH during 1998, I would owe taxes only on the appreciation amount, since the original investment was made with after-tax dollars, again spread over 4 years.

My question is whether it is legal to convert only the non-deductible IRA to a ROTH? Both IRA's have been kept totally separate to make this sort of record-keeping more simple. However, my accountant seems to think that if only a partial amount of total IRA holdings is converted to a ROTH, then the amount converted must be apportioned equally between all traditional IRA accounts held. I don't think I want to convert the deductible IRA since I would have to pay tax on the entire amount, and converting a partial amount divided between the two existing IRA's seems to make the record-keeping even more complicated? What do you think?

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