Roth Conversion Question
Person wants to do annual non deductible traditional IRA contributions and then immediately convert those to a Roth annually on a repetitive basis. Being told by his tax preparer this can cause red flags to worry about with the IRS, specifically the annual nature of the conversion, not necessarily the act of doing it and recommended doing the conversion every 3 years. Is there evidence of this being a more acceptable IRS plan?
Permalink Submitted by Alan - IRA critic on Wed, 2021-12-01 23:45
There is no problem making the ND contribution and converting right away. That said, pending legislation in Congress would end the conversion of any after tax amounts including non deductible IRA contributions that have been reported on Form 8606. Therefore, this might well be the last month that 2021 and prior IRA non deductible contributions can be converted.
Permalink Submitted by John Boyle on Thu, 2021-12-02 20:38
If a client has non-deductible contributions in their TIRA, and wants to pull them out, is it still an option to move the pretax amount to their 401k (if the plan allows), then withdraw, tax-free, the non-deductible amount?