roth ira conversion
in 2010 i will be able to convert some or all of my simple ira to a new roth ira regardless of my income level (of course paying the taxes on the coverted amount). once this new roth ira is established can i make future contributions to that roth ira without yearly income restrictions? also can i continue to convert more from my simple ira to the new roth without income resrtictions?
Permalink Submitted by Alan Spross on Mon, 2009-05-11 16:45
Starting in 2010 you will be able to convert as much as you wish as long as you have a source account to convert from and can pay the taxes. It is not advisable in most cases to pay taxes from an IRA distribution. However, the income limits for regular Roth contributions are only increasing by annual inflation amounts, and therefore your regular contributions may continue to be restricted by income. There is no income limit for a TIRA contribution and you could make a TIRA contribution and then convert it immediately to a Roth. All you need is earned income to make the TIRA contribution.
While you can add new conversions or regular contributions to a recent Roth conversion account, this can have considerable effects on the amount of your recharacterization if you later decide to recharacterize any conversion done into that account. The earning calculation for a recharacterization includes the results of the entire account, not just the conversion investment for the conversion being recharacterized. After the recharacterization deadline has passsed, any separate Roth conversion accounts can then be combined with other Roth accounts to limit the total number of accounts.