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 Dear
Dr. Don,
Can you have two Roth IRAs? I currently have both
a Roth and a traditional IRA. I only have $85
in the traditional. Can I convert it to a Roth?
I don't really intend to contribute any more to
it. I don't want to roll this over into my current
Roth because it's invested in an annuity.
Thanks,
-- Chris Conversion
 Dear
Chris,
You can have as many Roth IRA accounts
as you like. You have to qualify to contribute
to a Roth IRA, and new money contributions in
any tax year are limited to the combined contribution
limits for Roth and/or traditional IRAs, but the
number of accounts isn't limited.
The conversion
of the $85 from a traditional IRA to a Roth IRA is a bit problematic. The dollar
amount is so small that it seems hard to justify the investment of your time.
That's especially true if the Roth IRA account has an annual account fee. Here's
what IRS Publication 590, "Individual
Retirement Arrangements," states as minimum conditions for qualifying for
the rollover:
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Converting from any traditional IRA into a Roth IRA |
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| You
can convert amounts from a traditional
IRA into a Roth IRA if, for the tax
year you make the withdrawal from the
traditional IRA, both of the following
requirements are met: |
| • | Your
modified AGI for Roth IRA purposes is not more than $100,000. | | • | You
are not a married individual filing a separate return. | |
There's more to it than just that, but Publication 590
spells out the details. If you plan to keep funding Roth IRA accounts
in this and future tax years then converting the traditional IRA to a Roth IRA
can make sense. If the $85 is going to continue to hang out on its own, you could
consider cashing in the account and paying the income and penalty taxes due. That's
especially true if you're paying an annual account fee on the account.
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