Roth Conversion MAGI Limits
I know you are permitted to make a qualified rollover contribution from a traditional IRA to a Roth IRA if your Modified Adjusted Gross Income (not including the taxable amount rolled over) for the year during which the rollover is made does not exceed $100,000 and you are not a married person filing a separate tax return. What is the limit if you are married filing jointly? Most of my clients make under 100K/year individually but as a couple they make normally 150K+.
Permalink Submitted by Clyde Wolf on Thu, 2008-10-23 23:30
Jstanga,
The MAGI limit for ROTH IRA Conversions in 2008 and 2009 is $100,000 for everyone except those Married Filing Separately.
Even though you are married, if you did not live with your spouse at any time during the year your filing status is single.
After December 31, 2009 there is no MAGI limit for converting to a ROTH IRA.
Permalink Submitted by Jeff Stanga on Thu, 2008-10-23 23:38
So to confirm I cannot facilitate a Roth conversion for a married person making 80k if their spouse makes anything more than 20k per year? Thank you for your help.
Permalink Submitted by Alan Spross on Fri, 2008-10-24 03:05
That’s right, but rather you need to determine their MAGI rather than what “they make”. For example, a W2 employee can have thousands of dollars in gross salary that do not count due to deferrals such as 401k, FSA, pre tax health premiums etc. that substantially reduce their W2 BOX #1 wages. They may also easily have a 3,000 capital loss or Sch C losses. This is something to consider if the MAGI appears to be close to the 100,000 limit.
In case you guess wrong, the conversion will have to be recharacterized, but you have to make the conversion distribution no later than 12/31 of each year.
In just 14 months, the MAGI issue will be gone for good (1-1-2010).