Same Year Contribution/Conversion
I have a client who has too much earned income to contribute to a Roth IRA in 2010. He can, however, contribute after-tax dollars to a traditional IRA in 2010. Of course, he will make too much money in 2011 to convert the traditional IRA to a Roth in 2011.
My question is can the client make an after-tax contribution to a traditional IRA this year then subsequently convert that Traditional IRA to a Roth IRA in the same year (2010)?
Sincerely, with thanks,
Paul.
Permalink Submitted by Jose Morales on Thu, 2010-05-27 15:50
Yes, you can make a contribution and a conversion in the same year. One important thing to keep in mind is any funds the client may have in a Traditional IRA and the effect they would have on the possible taxation of the conversion. If there are any deductible contributions or earnings in any other IRA then the conversion would be taxable on a pro-rata basis.