Roth IRA conversion from non-deductible traditional IRA


B

Beliavsky

My wife and I exceed the income limits to contribute to a Roth IRA or
to get a tax deduction for a traditional IRA, but in the 2010 there
are no income limits for converting a traditional IRA to a Roth IRA.
She has $8K in a traditional IRA. Can we contribute $5K before year-
end to a non-deductible traditional IRA for my wife and another $5K
next year and then convert the total of $18K in the deductible and
non-
deductible traditional IRAs to a Roth IRA? We would owe income tax on
the $8K converted from the existing traditional deductible IRA, but
earnings on the $18K in the future would be tax-free.

The 2010 laws for Roth IRA conversions are discussed at
http://www.fairmark.com/rothira/eligible.htm .
 
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A

Arthur Kamlet

My wife and I exceed the income limits to contribute to a Roth IRA or
to get a tax deduction for a traditional IRA, but in the 2010 there
are no income limits for converting a traditional IRA to a Roth IRA.
She has $8K in a traditional IRA. Can we contribute $5K before year-
end to a non-deductible traditional IRA for my wife and another $5K
next year and then convert the total of $18K in the deductible and
non-
deductible traditional IRAs to a Roth IRA? We would owe income tax on
the $8K converted from the existing traditional deductible IRA, but
earnings on the $18K in the future would be tax-free.

The 2010 laws for Roth IRA conversions are discussed at
http://www.fairmark.com/rothira/eligible.htm .
Sure. Be sure to file form 8606 for each year.

And be sure to use form 8606 to calculate the amount of
taxable conversion.
 
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T

tina32

tina32 had written this in response to
http://www.rockryno.com/taxes/Roth-IRA-conversion-from-non-deductible-traditional-IRA-24404-.htm
:
Generally, yes, but please review your situation fully before you make any
changes to your retirement plan.

Here are some helpful links (basic do's and don'ts, what to stay away
from,
etc):

http://www.rothirarules.net/roth-ira-contribution-limits.htm

http://www.rothirarules.net/roth-ira-tax.htm

http://www.rothirarules.net/roth-ira-eligibility.htm

-------------------------------------
Beliavsky wrote:



My wife and I exceed the income limits to contribute to a Roth IRA or
to get a tax deduction for a traditional IRA, but in the 2010 there
are no income limits for converting a traditional IRA to a Roth IRA.
She has $8K in a traditional IRA. Can we contribute $5K before year-
end to a non-deductible traditional IRA for my wife and another $5K
next year and then convert the total of $18K in the deductible and
non-
deductible traditional IRAs to a Roth IRA? We would owe income tax on
the $8K converted from the existing traditional deductible IRA, but
earnings on the $18K in the future would be tax-free.
The 2010 laws for Roth IRA conversions are discussed at
http://www.fairmark.com/rothira/eligible.htm .





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