Traditional IRA recharacterization to Roth
If one can contribute to a non deductable IRA, but cannot contribute to a deductable IRA or Roth IRA due to income restrictions, why wouldn’t they do that every year from here on and the just recharacterize it to a Roth after that since the income restrictions to do that have been lifted?
Permalink Submitted by Alan Spross on Thu, 2010-02-25 00:16
This can be done and many higher income taxpayers are planning to do just that every year – make the non deductible TIRA contribution and then immediately convert it to a Roth IRA. But for that conversion to be tax free, they cannot have other TIRAs such as rollover IRAs, or the conversion will be mostly taxable.