Roth IRA conversion & Adjusted Gross Income
I have a client who has AGI less than $100K which makes him eligible for conversion. Client wants to convert $680K from traditional IRA to Roth IRA. I met with client’s CPA who says we cannot do that because the conversion will put client over AGI. I was under the impression that the amount converted does not count against AGI for conversion purposes but cannot find official documentation of this, although I have seen several articles that mention that the amount converted is not counted against the AGI limitation. Can you please provide some guidance? Thank you.
Permalink Submitted by Denise Appleby on Wed, 2008-01-23 18:33
Your understanding is correct.
The logic? People often convert million dollar+ IRA balances
Check IRS Publication 590 at http://www.irs.gov, which lists the eligibility requirements. You will notice that it does not state anywhere that there is a limit on the amount that can be converted.
Ask the CPA to provide you with a cite.
Permalink Submitted by Alan Spross on Wed, 2008-01-23 23:22
I could not open Denise’s link to Pub 590.
The reference in the Pub is in two places:
1) P 29 – indicates conversion MAGI limit is 100,000 with MAGI explained in Chapter 2.
2) P 60 – Chapter 2 definition of MAGI indicates that RMDs and conversion amounts are subtracted from AGI as part of the MAGI determination.
Permalink Submitted by Denise Appleby on Wed, 2008-01-23 23:58
Sorry about that
Working linj http://www.irs.gov/pub/irs-pdf/p590.pdf