Contribute IRA

[Guest marka]

I have contributed to my IRA traditional 2001 in february 2002 and the fee for the transaction goes to my IRA in 2002 ($25), the problem is I can't have traditional IRA for 2002 since I am enroll in 401k since march 2002 and my income (filed married) overpass the limit for a traditional IRA how do I need to do with this $25in the IRA, maybe I can transfer for a Roth IRA and what do I need to do?

Thanks.

[Archimage]

Could you please repost your question. I am having a hard time understanding exactly what you are asking.

[Appleby]

Just to make sure I understand your question.

You made a $2,000 contribution to your traditional IRA in 2001

(for 2001).

You paid a fee of $25. Somehow, this fee was coded as a 2001 contribution.

Now you have a total contribution of $2,025 for your 2001 IRA contribution.

Am I right so far?

For 2002, you participate in an employer sponsored plan -401(k). You state that as a result you cannot contribute to your traditional IRA for 2002. This is incorrect. You may not be bale to claim a deduction for contributions made to your traditional IRA, but participating in a plan does not affect your ability to contribute to the IRA.

You cannot recharacterize the excess amount to a Roth IRA. A recharacterization can only be done for the year for which the contribution was made. This means that a recharacterization will not change the fact that your total contribution for year 2001 if $2,025.

[John G]

Some custodians allow IRA account holders to write a separate check for the annual fees (like Bear Stearns). If you sent them a check designating this as payment for the annual fee and followed the custodians instructions, you should call the custodian and get them to get it straightened out and issue any corrections to you and IRS.

[Appleby]

True John.

Generally, a notification is sent to the IRA owner who is given a certain period within which to submit the fee payment to the custodian. If the payment is not submitted by the stated deadline, then the fee is debited from the IRA balance.

If he submitted the fee payment after it was already debited from the IRA, then the payment would be considered a reimbursement, and as such would be processed and reported as an IRA participant contribution.

The adjustment can be done only if the payment was made before the fee was debited from the IRA