Time Frame to Convert from IRA to Roth IRA
My client made a $6,000 non-deductible IRA contribution in February for 2011 due to being over the income threshhold to contribute directly to a Roth IRA. How long must he wait to convert his IRA contribution to a Roth IRA? Assuming that he has already converted his other traditional IRAs in 2009, and no gains occurred since his contribution was deposited into his IRA, will the conversion be tax free since he made the contribution as a non-deductible IRA contribution, no other traditional IRAS, and no gains?
Thank you for the help,
Todd
Permalink Submitted by Alan Spross on Mon, 2011-03-21 19:30
There is no waiting period to convert, so it could have been done right along with the non deductible contribution. Unless the contribution is now worth more than 6,000 a conversion will be tax free, providing no other TIRA, SEP or SIMPLE IRA accounts exist. So might as well go ahead and convert right away.
Remember that for the conversion to be tax free, the client must report the non deductible contribution on the tax return on Form 8606. If he made no 2010 contribution he could make that as well and then convert both of them at the same time, but would then have to add an 8606 to his 2010 return.