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Financial Planning / Tax Strategies


Subject:  Re: Non-Deductible IRA Date:  12/17/1997  7:18 PM
Author:  TMFTaxes Number:  935 of 123001


I'd like to take advantage of the new Roth IRA next year, and I was thinking that I could effectively
start off with a maximum of $4000 instead of $2000 by making a $2000 non-deductible IRA
contribution in 1997, then rolling over the non-deductible IRA into a new Roth IRA at the start of

Would this work? More than that, is this a smart move?>>

It MIGHT work. Remember that you can't designate an IRA contribution as "non-deductible". An IRA contribution is deductible unless circumstances make it non-deductible.

In your backround, you said that that you are covered by a qualified plan (401k). But that alone is not enough for a non-deductible. You would have to couple this with "excess" income. If you are single, and your AGI is more than 35k, you are over the limit for a deductible IRA. If you are married, that limit moves up to $50k.

So, if you are over the income limitations, you certainly could open a non-deductible IRA this year, and then roll it to a Roth in 1998 (assuming tha