Contribute to Traditional and Convert to Roth

Submitted by Terry Nelson, CFP, MS on Tue, 2014-04-01 20:57

I have a client a 0 balance in traditional IRA’s, except for balances in her 403(b) which she cannot access now while she is still working.

Will the 403(b) prevent her from contributing to a Traditional IRA and then converting it (without paying a partial tax)?

Terry N

Permalink Submitted by Alan - IRA critic on Tue, 2014-04-01 21:59

No. She can make a non deductible TIRA contribution and then convert it immediately to a Roth IRA with no tax due. The 403b has no affect on this. She must file Form 8606 showing a non deduction contribution and the conversion goes on the same form unless the contribution was for the prior tax year. In that case, an 8606 for the year of conversion would also be filed.
Until 4/15 client could make a 2013 contribution AND a 2014 contribution and then convert them together to a Roth IRA tax free.