Roth Conversions
When doing Roth conversions, the amount of the conversion is added to MAGI. However, when considering Roth contributions, does the conversion affect the ability to contribute to Roth for the same year? For example, if we convert $50k this year and that takes our MAGI over $196k, would we still be able to contribute to a Roth in that year knowing that our MAGI was only $175k without the conversion?
Thanks!
Permalink Submitted by David Mertz on Tue, 2020-12-08 16:41
Conversions to a Roth IRA have no effect on the amount one is eligible to contribute to a Roth IRA. The taxable amount of the Roth conversion adds to AGI, but one of the modifications to AGI for the purpose of determining the amount one is eligible to contribute to a Roth IRA is to subtract back out the taxable amount of the Roth conversion. In other words, MAGI for the purpose of a Roth IRA contribution excludes the taxable amount of Roth conversions or rollovers to a Roth IRA from qualified retirement plans. (The taxable amount of In-plan Roth Rollovers in qualified retirement plans are not excluded.)