Re: IRA contribution
I assume your wife contributed pre-tax dollars to her 401(k). In that case you would not want to contribute to the rollover IRA with post-tax dollars. She should open another account.
ADD: Your wife can add to the IRA by contributing to it as a traditional IRA. This could help to avoid minimum balance problems with opening another account. She would not be able to roll the account over again to another employer's plan, but this usually isn't a big concern.
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