Permalink Submitted by Alan - IRA critic on Fri, 2014-11-21 00:21
If your income is too high to contribute to a Roth IRA directly, you can make a non deductible TIRA contribution reported on Form 8606 and immediately the contribution to a Roth IRA. The conversion will only be non taxable if you have NO OTHER non Roth IRA balance beside the recent non deductible contribution. If you DO have a pre tax TIRA balance such as from a rollover IRA or prior deductible contributions, you can still make the conversion non taxable if you roll over the pre tax TIRA balance into your current employer’s plan should the employer plan accept IRA rollovers. In other words, it is either a two step or three step process which has the same result as a direct Roth contribution.
Permalink Submitted by A Scherer on Fri, 2014-11-21 02:53
So I can give my son $ for Roth IRA, and he uses that $ to make Traditional Non-Deductible IRA and report that $ on Form 8606 for IRS, and then he may immediately (same month, same year?) convert it to Roth IRA. Do I understand that correctly? This has not changed from last year, right? He has no other Traditional IRAs. But he does have a non-IRA plan at his work. Thank you very, very much for your answers.
Permalink Submitted by Alan - IRA critic on Fri, 2014-11-21 00:21
If your income is too high to contribute to a Roth IRA directly, you can make a non deductible TIRA contribution reported on Form 8606 and immediately the contribution to a Roth IRA. The conversion will only be non taxable if you have NO OTHER non Roth IRA balance beside the recent non deductible contribution. If you DO have a pre tax TIRA balance such as from a rollover IRA or prior deductible contributions, you can still make the conversion non taxable if you roll over the pre tax TIRA balance into your current employer’s plan should the employer plan accept IRA rollovers. In other words, it is either a two step or three step process which has the same result as a direct Roth contribution.
Permalink Submitted by A Scherer on Fri, 2014-11-21 02:53
So I can give my son $ for Roth IRA, and he uses that $ to make Traditional Non-Deductible IRA and report that $ on Form 8606 for IRS, and then he may immediately (same month, same year?) convert it to Roth IRA. Do I understand that correctly? This has not changed from last year, right? He has no other Traditional IRAs. But he does have a non-IRA plan at his work. Thank you very, very much for your answers.