I want to contribute to my Roth IRA, but my custodian says I can't put annual contributions into an account that has been converted. Is this true?

There's no legal reason for you to separate your contribution and conversion funds into separate accounts. Under the old Roth IRA rules, contributions and conversions had different five-tax-year start times, depending on conversion and/or contribution dates. Because of these staggered start times, the IRS suggested that contributions and conversions be maintained in separate Roth IRA accounts. That suggestion was made to the various financial institutions, and the institutions passed that information on to their clients.

But with the changes to the Roth IRA rules with the Tax Reform Act of 1998, the need for these separate accounts has been negated. It is now acceptable to commingle your Roth IRA conversions and contributions. While there are still staggered start times for contributions versus conversions, the rules surrounding those start times are much clearer. So having conversions and contributions in the same account, while still tricky, isn't impossible to deal with.

If your broker still insists that you separate your conversion funds and contribution funds, make sure to tell him or her of the new law that removed the segregation restrictions. And if that doesn't work, consider finding a new broker.