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It seems counterintuitive to me that there are different income thresholds for contributing to a Roth IRA and rolling over a traditional IRA into a Roth. My DW will be rolling over her 401k into an IRA this year since she left her job in December. I would like to roll it into a traditional IRA and then immediately roll it over into a Roth. Unfortunately our AGI is around $110,000, just above the 100K limit for rollovers, but below the 150-160K cap for contributions.

Am I reading the IRS publications right? If so, then she will need to have two accounts, the rollover IRA and a new Roth IRA funded with new contributions. This is especially an issue, since we plan to use Vanguard and they have a $10/year fee for accounts less than 5K. I guess if we fund a Roth IRA this year and bring her aggregate amount above 5K, we can avoid the fee.

This may be the last year that we qualify for Roth contributions for some time based on income eligiblity. Does that mean that our accounts will be stuck at their 2003 levels (plus gains, if any) if we dont qualify for contributions in 2004?

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