Does a spouse’s IRA count in a Roth conversion?
Hello, I am considering opening an IRA account with a 5000$ non-deductible contribution and converting it to a Roth next week. I do not have any IRA’s in my name though I am enrolled in an employer sponsored 401(a) plan. Will I need to take into account my husband’s IRA basis(as we file a joint return) to figure out taxable vs non-taxable conversion income?
I have looked through pub590 and cannot see any rules regarding combining IRAs when you file a joint return. So I presume, each person owns his or her IRA and calculates based on that. Am I right?
Thank you,
Vinaya
Permalink Submitted by Alan Spross on Thu, 2009-12-31 00:36
Yes, you are correct. With respect to basis, each spouse files their own 8606 form and there is only room for one SSN on that form. His basis does not affect your own conversion.
You could make both your 2009 and 2010 regular TIRA contributions after 1/1 and convert them both right away if you wanted to. You would need an 8606 to report the non deductible TIRA contribution on your 2009 return, and on the 2010 return the 8606 would be used to both report the 2010 contribution AND the 2010 conversion.
Since the conversion would be in 2010 and be tax free, you would want to opt out of the two year deferral of income when you file your 2010 return.
Permalink Submitted by Vinaya Sampath on Thu, 2009-12-31 01:08
Thanks for the reply, Alan. I gleaned as much after reading your numerous contributions on this board.
A follow-up question after reading your message on double contributions after 1/1. Do I have till Apr 15th, 2010 to set up a TIRA and designate my contribution for 2009 and can I still convert it tax free in 2010? If so, why do I keep reading Dec. 31 as a deadline? ❓
Thanks once again,
Vinaya
Permalink Submitted by mk foss on Thu, 2009-12-31 02:10
The contribution deadline is still April 15, 2010 for a 2009 traditional or Roth IRA.
A 2009 conversion must be in process by 12/31/2009 to qualify. The conversion that you plan for 2010 must be in process by 12/31/2010 although a complete conversion before that date is recommended.
Permalink Submitted by Vinaya Sampath on Thu, 2009-12-31 02:55
Thanks for the clarification. I still have some time to figure out how to structure the contributions. Phew!