Timing of converting a 2010 non-deductible TIRA contribution
Assume a client either has no current TIRA or has converted their entire TIRA to Roth earlier in 2010. Also, their AGI precludes a Roth contribution. If they were to make a non-deductible TIRA contribution of $5,000 today is there a timeframe within which they cannot convert? Can they convert one day later, must they wait until 2011? I see no definitive guidance, thanks.
Permalink Submitted by Alan Spross on Sun, 2010-01-10 17:17
The only time limitation is on reconversions after a recharacterization. A TIRA can be converted at anytime, even the same day as contributions have been made or a rollover received. There is no limit on the number of conversions that can be done.
All conversions made in a single year are taxed based on the Form 8606 that reports the conversions. They all end up with the same taxable percentage, so it would not matter what order these conversions were completed. It could be the order in your post, or the non deductible contribution could be converted first and the other balance second and the tax result would be the same.
If a recharacterization is desired, a client can select how much of any particular conversion is recharacterized, and it does not affect the other conversions.