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Step 1: In January '98, I was able to start my own Roth IRA as well as my wife's. Opening deposits were made with projected 1998 earnings. At the time, I had a litte extra cash, so I opened a traditional IRA for 1997 (no previous IRA existed for her) in her name as well, and took a tax deduction for 1997. I immediately converted the Traditional account for the Mrs. into a Conversion Roth account in her name. Though our marginal tax rate will remain 31% for tax years 1997 and 1998 (so the tax I would have paid on her Traditional opening deposit would be the same dollar amount in 1997 and 1998) I find now at the end of this year our AGI will be well past the $100K threshhold for IRA-to-Roth conversions. So it looks like I have to ask for my money back before the end of the year in order to avoid penalties on the overage to her Roth. Is that right? Earnings from the overage balance through the year have to remain in the old Roth, I think.

Step 2: Last year year I had no idea who Fools were, and now I think I are one. After I get the overage refunded (that is in concept canceling the conversion transaction), I could time the refund to come late in the year, hold the cash 'til 1/2/99 or after, then use the funds to start-up the 1999 Roth for the Mrs. in a stock-based account with a brockerage. This should capture, to the extent possible, low fees, earliest deposit and compounding, etc. thoughout 1999. If this looks good to those who see this post, what/how can I do in preparation between now and 12/31 to a)open an account in 1998 (possible?), and b)be prepared to receive funds for the 1999 deposit after New Year?

Step 3: On older Traditional IRA I have, originally from a small lum-sum disbursment of 401K from my previous employer, has been eeking out a miserly interest rate at the bank. They won't let me convert it within the bank, so I am thinking of pulling it anyway, for a nice base in a FF brokerage IRA. Anyone have a link to payback tables that can tell me the return I need to gain in the new account to beat the penalty for breaking the banks terms on the deposit? Balance to pull is about $4500.

A post or reply via e-Mail is appreciated greatly.

robortiz@nortelnetworks.com
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