No. of Recommendations: 7
Traditional IRA: Money goes in pre tax. Subject to max contribution limits and max income limits. Major penalties for access before 59 1/2;
required min distributions after 70 1/2.

Rollover IRA: Can be from a 401K or another traditional IRA. As long as
they are both from pretax sources, they are treated the same as traditional IRA.

After Tax IRA: Keep this as a completely separate account. Mixing with a pre tax IRA or Rollover from pre tax source will create an accounting nightmare.

Don, since your goal is to enlighten and inform, on reflection I'll suggest you reconsider the way you present this in the future. For tax purposes there is zero, zilch, nada, bupkes difference between these three accounts. They are all simply traditional IRAs, as are SEPs and properly-aged SIMPLEs. By presenting them as different creatures you leave the reader open to the inference that the differences matter. They don't.

Just a slight quibble about your last sentence of explanation regarding rollovers. In a fairly recent change to the law, Congress enabled rollovers of after-tax 401(k) money to traditional IRAs. With or without after-tax contributions, the rollover is just a traditional IRA treated like all others.

There was a time when your "rollover" IRA, also called a "conduit" IRA, could be "tainted" by contributions, thus eliminating the possibility of rolling it into a future employer's plan. That restriction was removed several years ago, yet some people still think it's in existence. Heck, the law on taxation of gain on sale of personal residence changed in 1997, and people still rattle on about what they did with the proceeds.

Later in the thread you told us that you and several acquaintances find it easier to keep all your after-tax contributions in one account. Perhaps if you explained why you find it easier it would help people make their own choices.

As always, thanks for your contributions.

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