Need help with IRA – Pleae help!!
Hi,
I have a traditional deductible IRA from 2006 when I was not working and did not have an employer sponsored 401K.
My husband has a 401K from a previous employer that is now rolled into a traditional IRA during 2011.
We received some advice from a Financial Planner and opened a traditional IRA and made a non-deductible contribution that we converted to a ROTH during 2011.
My CPA is again telling me to contribute to a ROTH IRA, by making a non-deductible contribution to a traditional and then converting to ROTH.
I want to know if we are eligible to contribute to a ROTH. We both have employer 401Ks.
Thanks!
Permalink Submitted by Alan - IRA critic on Wed, 2014-04-02 23:41
If your joint modified AGI is under 178k you both can make full regular Roth contributions for 2013. If your income is too high for a regular contribution, you can make non deductible TIRA contributions for 2013 before 4/15 and convert them to a Roth IRA, however since you both have existing pre tax TIRA balances now your conversions would be partly taxable in 2014, as may have been the case for your 2011 conversion. In calculating the conversion tax on Form 8606, the taxable amount is determined by pro rating the year end balance against your basis from non deductible contributions. Each spouse would have their own 8606 form, but his rollover IRA balance is probably much larger than your TIRA balance, so his conversion would be more taxable than yours. So first step is determining if your modified AGI is under 178k or not.