Non-deductible IRA to roth
A client that is not eligible to fund a Roth IRA wants to fund a non-deductible IRA and then convert it to a Roth? Is this permissible?
A client that is not eligible to fund a Roth IRA wants to fund a non-deductible IRA and then convert it to a Roth? Is this permissible?
Permalink Submitted by Alan Spross on Fri, 2011-01-21 16:54
Yes, it is a totally acceptable work around for taxpayer’s whose income is too high for regular Roth contributions. But remember that if the taxpayer has a pre tax balance in any of their IRAs, the pro rate rules apply and these conversions will be partly taxable. If this is the only IRA and converted right after contribution, then it will be a tax free conversion.