The bearings in my 87 Ironman has caged bearings that I want to replace with loose bearings. The caged bearings have a thin plastic ring that sits on top of the bearings. I'm wondering if I put this ring back on top of the loose bearings?

Often times just googleing what you want, in this case "sealed bicycle headset schematics" and you should get lots of information...

I know how the parts go I just don't know if I need the thin plastic seal if I'm not using the retainer.

The seal should be independent of the bearing balls. Bearing contact is steel balls between 2 steel races. Seal fills gap between outer parts of races to keep crap from getting into bearing contact area. Going sans retainers just means more loose balls, not too many though. Without seeing your actual parts I could be wrong. Possible your headset may use the ‘squarish bottom’ of the retainer as support for a seal, can’t tell from here, wouldn’t think so.

yep, typically the plastic "seals" both on top or bottom don't make contact with any bearings whether or not there are caged retainers. You should be fine to replace the caged bearings with the same SIZE balls but fill the entire cup raceway with as many balls as fit and then remove one. Helps to use a grease with some "stickiness" so the balls stay in place until everything is back together.

Yup, this is my experience also.