USA Nondeductible IRA Roth Conversion Timing Question


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I have a client who has a large traditional IRA balance, and a non-deductible IRA balance as well. They would like to convert the non-deductible IRA to a Roth, and prior to doing so, will roll their traditional IRA balance into their employer 401(k) plan to avoid the aggregation rules.

My question revolves around the timing of this. If my client rolls the traditional IRA into their 401(k) plan now (prior to year end), can they do the conversion this year as well? Or will they have to wait until 2020 to convert the non-deductible IRA to avoid the aggregation rules.

Thanks.
 
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Werner Reisacher

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Before you proceed, discuss with your customer the reason of transferring a traditional IRA into a 401K plan. Nothing changes with regards to the tax deferral feature of the investment. A lot will change with regards to the adding IRS restrictions and requirements with regards to the availability of funds and minimum distribution requirements. (Penalty if withdrawn prior to 59,5 years and minimum distribution requirements at 70.5 years.
 

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