No. of Recommendations: 1
I rolled the money into the traditional IRA with no problems. The problem now, as I understand it, is that due to our AGI I cannot make further contributions without getting into "excess contributions".

"Excess contribution" is a term of art. It is a contribution of more than the $3000 (or $3500 for older folks) limit on IRA contributions. There is no AGI tie-in to the IRA contribution limit. Your rollover does not count as a contribution. You can always avoid excess contribution problems by staying under the limit, no matter what your AGI. So unless you've already funded your IRA (Roth or traditional) to the limit, you don't have an excess contributions problem.

The AGI to make contributions to a Roth is higher, so I could make contributions to a Roth.

As long as you have earned income, anyone can contribute to a traditional IRA. However, if your income is too high, you might not be able to deduct that contribution. But you can always make one.

Roth contributions have a higher limit, but once you cross it, you can't make a contribution to a Roth.

So, move it to my current 401(k) or convert to a Roth?

You can keep your rollover money in a traditional IRA and have a Roth IRA at the same time. The two are not mutually exclusive. You can also have multiple traditional and/or Roth IRA's as well.

So you don't HAVE to rollover your traditional IRA to your new employer's 401k in order to make a Roth contribution for the year. Neither do you HAVE to convert it to a Roth before making Roth contributions. You can make the Roth contribution without regard to what account your old 401k money is now in.

--Peter
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