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ROTH Conversion *MFJ taxpayers *One spouse works and

ROTH Conversion*MFJ taxpayers *One spouse works...
ROTH Conversion*MFJ taxpayers
*One spouse works and participates in a retirement plan
*AGI is over $ 200KThey both put $ 5500K into a Traditional IRA - non deductible. Then they converted the money into a ROTH. Here are my questions -1. Can they make the contribution to Trad IRA and do the conversion to ROTH in the same tax year?
2. Confirm that there is no AGI limit to have the ability to convert to a ROTH.
3. When they do the conversion - confirm that they will have to pay tax on the amount of growth in the Trad IRA (if any).Thanks,
JW
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3/22/2018
Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 32,721
Experience: Taxes, Immigration, Labor Relations
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1. Can they make the contribution to Trad IRA and do the conversion to ROTH in the same tax year?

Yes - that is not prohibited. They may do conversion on teh very next day after contribution.
2. Confirm that there is no AGI limit to have the ability to convert to a ROTH.

That is correct - no AGI or any other limitation for conversions.
3. When they do the conversion - confirm that they will have to pay tax on the amount of growth in the Trad IRA (if any).

That is correct.

For non deductible traditional IRA contribution - use form 8606

For conversion - the original non deductible contribution is converted tax free.

For earning - if any - they will be reported as ordinary income.

No penalty for conversion.

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Lev
Lev, Tax Advisor
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