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Subject:  Re: Nondeductible -> Roth conversion question Date:  2/21/2012  3:40 PM
Author:  TMFPMarti Number:  115166 of 127519

I thought there was a AGI limit for Roth conversions, but it looks like that was canceled in 2010.

Correct. Also gone is the prohibition on conversion for Married, Filing Separately filers.

We haven't made any contributions for 2011 or 2012 yet. Can we each contribute $10,000 to a nondeductible IRA (5K for 2011, 5K for 2012) and then turn around and convert all of those to Roth IRAs? That seems like it skirts the AGI limits placed on Roth IRAs, but I can't find any evidence that it is not allowed.

It does skirt, and it is allowed. BUT. It won't have the tax effect you think. You cannot isolate your after-tax contributions, even in a separate traditional IRA account, and convert just those contributions. You must look at all of your traditional IRA accounts, including rollovers from employer plans, SEPs, and SIMPLEs. See Part I of Form 8606, which is where you would calculate the taxable amount of the conversion.

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