Converting Non-Deductible IRA Contribution
Have a client who wants to get around not being able to make a Roth IRA contribution. The idea he has presented is to, establish a traditional IRA account and fund it with a non-deductible contribution and then once that is done, convert those monies into his existing Roth IRA account … Is this permissible ?
Permalink Submitted by Alan - IRA critic on Tue, 2013-03-26 19:48
Greg, it is permissible providing he has earned income and has not reached 70.5. The main pitfall is that all of his non Roth IRAs must be considered on Form 8606 and therefore the conversion is tax free only if he does not have any pre tax IRA value, eg from a rollover IRA, prior deductible TIRA contributions or SEP contributions.
Permalink Submitted by Gregg Guiol on Wed, 2013-03-27 14:48
Client maintains currently an existing IRA Rollover account and a Roth IRA account … If this non-deductible IRA contribution went into a new TIRA (separate from the rollover IRA), then converted that amount to the Roth IRA, would he be ok then ?
Permalink Submitted by Gregg Guiol on Wed, 2013-03-27 15:50
Disregard my follow up question … Have spoken to client and he has decided not to do it … Didnt want anyone to waste time responding … Thanks for all the help over the years … Much appreicated