Roth IRA Contribution Limit / Roth Conversion Impact
My wife and I have saved diligently over the years and have amassed sizeable TIRA and 401k sums. We are planning significant, controlled Roth conversions over the next few years to take advantage of the temporarily more favorable tax brackets. I am 67 years old and am working part time. My wife will be 70.5 years old in 2018 and has taken her first RMD. I do not have a qualified plan with my employer.
One of my questions concerns the impact of taxable dollars from the Roth conversions. My understanding is that they will not affect the eligibility to contribute to Roth IRAs for myself or my wife (spousal) or a TIRA for me. How do Roth conversion dollars affect the Medicare IRMAA and the 3.8% ACA surcharge?
The other is: In light of the fact that I do not have an employer plan, is there an upper income limit (exclusive of Roth conversions) restricting my ability to contribute to a Roth IRA?
Thank you for your help.
Permalink Submitted by Alan - IRA critic on Fri, 2018-04-13 17:18
For 2018, the MAGI phaseout range for regular Roth contributions for joint filers is 189k to 199k. Conversions are not counted in your MAGI for purposes of making regular Roth contributions. Since you are not an active participant in an employer plan, there is no dollar limit for deducting a TIRA contribution should you choose that instead of a Roth contribution. However, conversions DO count for other purposes including IRMAA and the 3.8% Medicare surtax which kicks in at 250k. IRMAA tiers will resume getting an inflation adjustment starting in 2020. You need to be more careful with conversion decisions now that no recharacterizations of conversions are allowed.