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I want to wade in with a couple of clarifications to the basically correct information you've already been given.

1. There is no income limit for traditional IRA contributions. If you have $2,000 in compensation you can contribute $2,000 to a traditional IRA. AGI-based phaseouts apply to the DEDUCTIBILITY of those contributions if you or your spouse are covered by a retirement plan.

2. In case you missed it, properly conducted rollovers do not affect your taxes or your current year IRA contribution limit.

3. There is no early distribution penalty when you convert from traditional to Roth IRA.

I suggest you do some reading in All About IRAs, accessible through the Quick Find dropdown menue at the upper right of this screen.

Phil Marti
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