In 1998, I converted $45,000 from an IRA to a Roth IRA, taking advantage of the four-year tax rule. I've now paid taxes for two years. Can I move the last two years' worth back to the IRA and avoid paying the taxes for 2000 and 2001?

-- Joani Baxter


It's too late.

If you're going to move money from a Roth IRA back to a traditional IRA, the move -- known as a recharacterization -- must take place in the same tax year in which you made the conversion, says Maggie Doedtman, a senior tax-research and training specialist at

H&R Block

in Kansas City. So you needed to make this conversion back in 1998. At this point, you're stuck with the tax hit.

The Roth IRA, created in 1998, allows a taxpayer to contribute up to $2,000 in after-tax earnings to a retirement account. The earnings grow tax-free and are not taxed at withdrawal if the taxpayer holds the account for five years and is at least age 59 1/2. Contributions can be withdrawn penalty-free at any time.

If you have a traditional IRA but think the Roth IRA is a better deal, you have the option to convert. But if you have any pretax contributions and earnings in the account, you'll have to pay taxes on that money in the year in which you convert.

But if you converted to a Roth before Dec. 31, 1998, you could spread those tax payments over four years. If you converted, say, $40,000 to the Roth back then, you would owe ordinary income tax on $10,000 each year from 1998 to 2001. This wasn't an option -- you signed up for a four-year tax spread when you converted. Now you're stuck with it.

If you're having a tough time scraping up the money for your tax bill, check out this previous

Tax Forum for some tips.

Roths for Teens

Can a working teen contribute into a Roth IRA? Is there a minimum age or trustee required? Can that teen deposit stock certificates that were purchased directly from the company (such as Microsoft) in a Roth IRA? -- Patricia McLaughlin


Any teen-ager who has earned income can open and contribute to a Roth IRA account.

Ideally, earned income is reported on a

TheStreet Recommends

Form W-2

-- Wage and Tax Statement

. So if your teen has a job at, say, the local


, those wages would be reported on a W-2. But mowing the neighbor's lawns for cash also counts as earned income. Just be sure to keep track of the checks.

"There is nothing in tax law that says the account can't be in the kid's name," says Doedtman. But some brokers or banks will require that you open a custodial account instead. That means you must open the Roth IRA on your teen's behalf and you'll be the custodian of the account until she reaches the age of majority in your state. Call your favorite mutual fund company for more details.

You can contribute only cash to the Roth IRA. The account can buy stocks once it's established but you cannot transfer stocks in.

Roths for Expatriates

I am an expatriate living overseas and have complete control of my reportable income. I currently have more than $200,000 in my IRA account and would like to know if I can use my section 911 exclusion to cover a good part of this income and then roll it into a Roth IRA? -- Robert Koenig


Unfortunately, the foreign-earned income exclusion, a.k.a. the section 911 exclusion, can't help you here. It was designed to limit the amount of U.S. tax you'll owe on your foreign earned income. It was not intended to limit the tax hit on pension and retirement payments, says Richard O'Donnell, editor at


, an information provider to tax professionals.

As a U.S. citizen, you're taxed on your worldwide income. But the 911 exclusion allows you to exclude up to $76,000 (for the 2000 tax year) of your foreign-earned income from your tax return. Foreign-earned income includes wages, salaries, professional fees, sick pay and vacation pay from sources in a foreign country. It doesn't include dividends, interest and capital gains. Nor does it include retirement and pension distributions. So you will owe tax on the entire amount of your IRA conversion.

"But the exclusion is actually the worst of both worlds," says O'Donnell. You need earned income to open a Roth. But if you earned only $50,000, the credit would wipe it all out. So you need to earn more than $76,000 to qualify for the Roth.

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TSC Tax Forum aims to provide general tax information. It cannot and does not attempt to provide individual tax advice. All readers are urged to consult with an accountant as needed about their individual circumstances.