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Please let me know if I have this correct.

a) DF contributes the max to his 401K
b) when he leaves his current company we can transfer it (or roll it over, or whatever the proper term is) to a traditional IRA.
c) we can then pay the taxes on that money and recharacterize (I hope that's the right word) it to a Roth IRA
d) all that money can then grow for 33 years (DF is 26) and we won't ever have to pay more taxes on it.
e) BUT if DF isn't eligible to contribute to a Roth this year (income too high) we can't recharacterize the IRA, but next year after we are married (sometime in April 2003) and filing jointly, he will be eliglble to contribute to a Roth IRA again and can recharacterize at that time.

If I have all that right, I think this may be the greatest thing since sliced bread!

Ok, on to part 2.

I have about $30,000 in a traditional IRA plus about $10,000 in a 401K that I am in the process of transferring to the IRA. I would like to recharacterize this to a Roth IRA this year, before we are married, so that the taxes aren't based on our joint income. But I'm not working. Do I have to have "earned" income to be able to recharacterize? If DF isn't eligible to recharacterize because he makes too much money to contribute to a Roth this year, then wouldn't the opposite be true? If I make too little (nothing) to contribute am I also not eligible to recharacterize? Do I need to go out and get a job so that I will be eligible to switch my IRA to a Roth? If I do have to earn some money, how much do I need? Does any of this make any sense?

Thank you for your help!!!

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