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Author: fullofcarp Big red star, 1000 posts Old School Fool Motley Fool One Everlasting Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121565  
Subject: IRA-Roth conversion Date: 5/6/2011 8:50 AM
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Sorry if this has been discussed many times before, when I saw the previous post's title about a conversion it suddenly occurred to me that I rolled the balance of a regular IRA into an existing Roth account about a year ago and now I may have a problem.

The amounts in both accounts were small (a couple thousand in each) and I just wanted to simplify tracking my portfolio. But when I filed my taxes (electronically via H&R Block software) a couple of months ago, my investment earnings pushed me over the limit for contributing to a Roth IRA for 2010, so I couldn't make a contribution (my salary left me in the range of income where the limit gets phased out, so I needed to wait until I filed before knowing if I could contribute this year).

Is a conversion subject to those same income limits? I'm pretty sure that I included the additional taxes to cover the conversion in my calculations and the software didn't seem to complain, so am I okay?

Thanks in advance for pointing me to the appropriate IRS documentation.

Bill
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Author: drippinfool Three stars, 500 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 113360 of 121565
Subject: Re: IRA-Roth conversion Date: 5/6/2011 12:32 PM
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From Pub 590 under What's New for 2010:

"Conversions and rollovers to Roth IRAs. The modified AGI and filing status requirements for converting and rolling over amounts to a Roth IRA are eliminated."

You can read all about it here:
http://www.irs.gov/pub/irs-pdf/p590.pdf

Starting in 2010 the income limitations for Roth conversions (not contributions) were eliminated, giving birth to the "backdoor Roth."

-drip

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Author: fullofcarp Big red star, 1000 posts Old School Fool Motley Fool One Everlasting Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 113365 of 121565
Subject: Re: IRA-Roth conversion Date: 5/6/2011 2:19 PM
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Starting in 2010 the income limitations for Roth conversions (not contributions) were eliminated, giving birth to the "backdoor Roth."

drip,

Oops, I replied to the wrong response in http://boards.fool.com/vkg-either-i-dont-understand-your-ans... (it wasn't a response to my post ... darn those similar sounding titles and the lack of an edit button).

As I mentioned there, maybe I'm being anal, but I don't see unambiguous wording regarding the elimination of the income limitations. I see this line
Starting in 2010, the $100,000 modified AGI limit and the filing status requirements for converting a traditional IRA to a Roth IRA have been eliminated.
Is that what you mean? And was the $100,000 AGI limit previously the only limit on conversions, meaning that now there are no AGI limitations whatsoever? Thanks.

Bill

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Author: TMFPMarti Big funky green star, 20000 posts Home Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 113370 of 121565
Subject: Re: IRA-Roth conversion Date: 5/6/2011 6:21 PM
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As I mentioned there, maybe I'm being anal, but I don't see unambiguous wording regarding the elimination of the income limitations. I see this line:

"Starting in 2010, the $100,000 modified AGI limit and the filing status requirements for converting a traditional IRA to a Roth IRA have been eliminated. "

Is that what you mean?


Yes, you are being anal. You're not going to find printed matter that will grab a 2x4, whack you upside the head with it, and yell, "Bill! There's no income limit on Roth conversions!" There's also nothing ambiguous about the quote.

And was the $100,000 AGI limit previously the only limit on conversions, meaning that now there are no AGI limitations whatsoever?

The $100,000 was the only income limit, which applied to all filing statuses except Married, Filing Separately, which could not convert at any income level. Both the filing status and income limits went away 1/1/2010.

Phil
Rule Your Retirement Home Fool

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