Do a Non-Ded Ira now and convert to Roth in 2010?
In 2010, will there be any restrictions on who will be able to convert an IRA to a ROTH?
Does it make sense for those who max out a 401k and can not do a Roth due to income restrictions, to do non deductible IRA’s and then convert them to a Roth in 2010?
Permalink Submitted by Alan Spross on Wed, 2008-02-20 20:22
No restrictions as of 2010 and later years.
The non deductible contributions make good sense mostly for those who do not have enough other IRA assets to convert and also because those that do not have much in other IRAs will have a higher % of basis as a result of a few years of non deductible contributions. They will be able to move more TIRA assets to a Roth per dollar of tax paid for the conversion.
Some people who already have a basis in their TIRA are attempting to transfer the pre tax amounts into their employer plan, leaving behind the basis only, and they will also be positioned to do a mostly tax free Roth conversion after 2009.
Permalink Submitted by Keith W. Springer on Wed, 2008-02-20 20:36
Thank you. What is TIRA? The only tax that will have to be paid upon conversion in 2010 will be the appreciation in the non-ded IRA, correct?
Permalink Submitted by Alan Spross on Thu, 2008-02-21 05:01
TIRA = Traditional IRA.
That’s correct as long as you don’t have other traditional IRA accounts, just the ones funded by the non deductible contributions.