LIFE BEYOND A ROTH TO TRADITIONAL IRA
I presently have a tradional IRA (TIRA) to which I have made post tax contributions. I plan to convert this IRA to a Roth IRA(RIRA) soon. I have 3 questions:
1. Could I continue to fund a TIRAin 2010 and convert it to RIRA’s in the future?
2. Is there a minumum time limit that a TIRA should be held before being eligible to be converted to a RIRA? i.e. can I establish a TIRA in Jan 2010 and convert it in December 2010.
3. Could this process be repeated each year?
Permalink Submitted by Alan Spross on Sat, 2010-01-02 18:14
1. Yes. But remember that when you convert, you must include the value of ALL your TIRA accounts and the ratio of your non deductible contributions as reported on Form 8606 will be the tax free portion of that conversion.
2. No time limit. You could make a contribution and convert it the same day. If your contribution is non deductible do not forget to report that on Form 8606.
3. Yes. This is a solution to those who have incomes too high to make regular Roth contributions.