UnThreaded | Threaded | Whole Thread (23) | Ignore Thread Prev | Next
Author: aj485 Big gold star, 5000 posts Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 76394  
Subject: Re: IRA to Roth IRA Conversion Date: 9/16/2013 3:12 PM
Post New | Post Reply | Reply Later | Create Poll Report this Post | Recommend it!
Recommendations: 1
I can't see any reason or ability to convert to a Roth. My wife and I make over 200K so my taxes would kill me.

If the conversion is a 'back-door' Roth conversion of a non-deductible IRA contribution that was made only a day before - there should be little/no tax consequences, as you have already paid taxes on the contribution, and in 1 day (especially if you were planning on doing the conversion) you are likely to have little or no gain on the contributed amount. This is a way for taxpayers with incomes that are too high to contribute to a Roth to be able to make contributions each year.

However, unless you don't have any other traditional IRAs, because of the pro-ration that occurs when calculating taxes on conversions, you will likely pay taxes on a large portion of the converted amount. One way to 'not have any other tradtionsl IRAs' is to convert all of your traditional IRAs, which could be a pretty big tax hit, as you point out. Another way to 'not have any other traditional IRAs' would be to move all of your IRAs to your current employer's 401(k) plan, because a 401(k) is not an IRA, and therefore, is not counted as part of the pro-ration calculation.

AJ
Post New | Post Reply | Reply Later | Create Poll Report this Post | Recommend it!
Print the post  
UnThreaded | Threaded | Whole Thread (23) | Ignore Thread Prev | Next

Announcements

The Retire Early Home Page
Discussion on accelerating retirement day.
Foolanthropy 2014!
By working with young, first-time moms, Nurse-Family Partnership is able to truly change lives – for generations to come.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Post of the Day:
Macro Economics

Economic Implications of Cuba
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
Community Home
Speak Your Mind, Start Your Blog, Rate Your Stocks

Community Team Fools - who are those TMF's?
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and "#1 Media Company to Work For" (BusinessInsider 2011)! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.
Advertisement