Roth Conversion Push AGI Over Phaseout
In 2010 I converted a Traditional IRA to a RIRA and took advantage of the 2011/2012 tax paying rules. Having to include 50% of the conversion has placed my 2011 AGI over the 2011 Roth phaseout limits. Does the conversion money now count against me in this case and I am not allowed to contribute to my RIRA for 2011? Without the Roth money added I would have qualified for at least a partial contribution. Also, I make small monthly contributions to a RIRA, and did so for 2011, so does the contribution need to be pulled out? I assume it’s not just the contribution, but also the growth on the contribution that would be affected. What are the consequences for this and what is the process if this route is necessary? Thanks in advance.
Permalink Submitted by Peter Lingane on Sun, 2012-03-04 18:00
I suspect that you are calculating your modified AGI incorrectly. Take a look at Pub 17 (2011) p. 132. MAGI does not include conversion income reported on line 15b, Form 1040.
Permalink Submitted by D Holmes on Sun, 2012-03-04 18:27
Thank you. I had been looking for information to confirm whether or not I had to include the RIRA conversion into the phaseout range. Based on your response and after reviewing IRS Pub 17 it appears the answer is no and I am in the clear. Thank you for your prompt response!