planning for roth conversions in 2010
If someone has a substantial traditional IRA and is also a participant in a qualified plan, and if the qualified plan accepts transfers from an IRA, will the participant then be able to make non-deductible contribution during the next few years and then convert the IRA to a Roth with tax consequences only on the earnings? Or is the transfer to the qualified plan still treated as an IRA.
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Permalink Submitted by Alan Spross on Fri, 2008-02-15 02:36
Yes, this is possible. The largest hurdle is getting the QRP to accept incoming IRA transfers, especially from IRA accounts that are not conduit IRAs, ie account that have been funded by regular contributions. The fear is that if the plan accepts IRA non deductible contributions, the plan could be disqualified. Therefore, some plans will only accept conduit IRA transfers, if they will accept any at all.
Once the IRA is transferred to the QRP, it is considered part of that plan and no longer an IRA in any respect.