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Recently I rolled over my entire balance from my former employer's 401k plan into a Putnam IRA, consisting of 5 different funds. (Maybe not the best idea, but that's where my former employers fund was maintained through). I only did this to keep it simple during the transfer of funds. Now that I have done this, I have more questions than ever. Currently, with my new employer, I contribute to their 401k plan. Can I still contribute money to the IRA that just opened along with my existing 401k employer plan?

They're totally separate creatures. You can contribute to both your new 401(k) and your IRA. (For that matter, you could have been contributing to an IRA back when you were covered by the old 401(k).)

Whether you should contribute to this IRA account is a different issue. Currently it is a "conduit" IRA, which can be rolled into another 401(k) if that plan allows. If you contribute to the account none of it can be rolled into a plan. You can still make IRA contirubutions, but if you make them to a separate account you preserve the conduit nature of this one.

Are there limits to the amount that I can contribute between the two within a given year timeframe?

For year 2000, the limits are $10,500 for all deferred compensation plans, e.g. the 401(k), and $2,000 for all IRA contributions. Note that rollovers don't count as IRA contributions.

Can I change funds within the year without penalty?

Yes. The best way to do this is through a direct transfer.

I realize that these are probably quite stupid questions for some of you, but for beginning fools, this stuff is quite confusing. Finally, any good reading material that could be of assistance?

Of course: All About IRAs:

Phil Marti
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