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A few years ago, I opened and IRA in my wife’s name under the mistaken notion that she was eligible in spite of the fact that I was covered under a qualified 401K. Once opened, I realized that the contributions to it were not tax exempt and I did pay income tax on that money. I believe I read at the time that I could just leave the funds in there until they would be eligible for pre tax status. That has not happened and I would like to transfer the funds into a more flexible account without the trading restrictions that come with an IRA such as complex options.

How do I transfer the funds to a traditional account without incurring taxes which I already paid, or do I just pull them out and account for it when filing taxes for this year? It sound like that could be a huge red flag to the IRS.

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