ONCE-PER-YEAR ROLLOVER RULE AND INCOME FOR ROTH IRA CONTRIBUTIONS: TODAY’S SLOTT REPORT MAILBAG

Thursday, March 31, 2022

By Ian Berger, JD
IRA Analyst
Follow Us on Twitter: @theslottreport

Question:

Hi,

I have a client that needs funds for a short period of time, so he plans to use the 60-day rollover rule to borrow money from his IRA and return it within 60 days. He has a Traditional IRA and a Roth IRA. He is under the impression he can do a 60-day rollover for each account. My understanding is that he can only do one 60-day rollover regardless of account type during any 365-day period, so he can only take funds from his IRA or Roth, but not both. Am I correct?

Answer:

You are correct. Traditional IRA-to-traditional IRA rollovers and Roth IRA-to-Roth IRA rollovers are aggregated for purposes of the once-per-year rollover rule.

Question:

Hello Ed Slott Team,

Do dollars that hit the 1040 from a Roth conversion get discounted when calculating MAGI for a Roth contribution? Have a great day!

Answer:

Yes. Modified adjusted gross income (MAGI) is used to determine eligibility for Roth IRA contributions. MAGI is a person’s federal adjusted gross income, with certain adjustments. One of those adjustments is a subtraction of income generated by a Roth conversion. For a full list of adjustments, see “Modified Adjusted Gross Income for Roth IRA Purposes” in IRS Publication 590-A.

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