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Phil - could I ask an additional question on this point?

I have around $5000 in a 401(k) plan and have decided to change jobs. I've decided to roll the 401(k) money into a traditional IRA. My new employer doesn't have a 401(k) plan, so I'm planning on regularly putting away a portion of my pay into the IRA.

I understand that I am able to make $2000 worth of deductible contributions to the IRA annually. Is the initial funding of the IRA with the 401(k) rollover money (the $5000) counted as part of the deductible contributions for the year? In other words, am I able to make deductible contributions to the IRA even though the initial funding (transfered from the 401(k)) exceeded the $2000 annual contribution limit?

Cheers,
Graham
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