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Hi, I made too much and have a 403 at work and hence cannot contribute to IRA. however, I heard that I can contribute to IRA but not take the tax benefit ( have to submit some specific form to IRS)but soon after convert the IRA to Roth.
Can anyone help me? is what I heard correct?
I thought I can put $5000 in an IRA and use it to invest in dividend stocks for the long term.
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You can never make too much to CONTRIBUTE to an IRA. You can make to much to take the TAX BENEFIT.

Currently you can put $5000/year in.

JLC
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thanks for the correction
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Hi, I made too much and have a 403 at work and hence cannot contribute to IRA. however, I heard that I can contribute to IRA but not take the tax benefit ( have to submit some specific form to IRS)but soon after convert the IRA to Roth.

It's true - to a point. You missed hearing a very important caveat. Do you have any other IRAs that have pre-tax money in them (traditional IRAs, rollover IRAs, etc.)? If so, when doing the conversion, the conversion will be taxed based on the % of IRA assets that are pre-tax. If you have pre-tax IRAs, the only way to convert 100% of the post-tax IRA contribution is to convert 100% of your IRAs to a Roth IRA.

See IRS Pub 590 for details.

AJ
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I heard that I can contribute to IRA ... but soon after convert the IRA to Roth.

In another thread, you mention that you have a rollover IRA. That means this particular strategy doesn't work very well for you.

As AJ mentioned, you can't convert just your non-deductible IRA contributions. You have to prorate the non-deductible portion over all of your IRA accounts. That means only a portion of the conversion to a Roth IRA would be tax-free. Potentially a very small portion.

--Peter
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yes, i do have a roll over IRA. I thought I can open a new account and contribute $5000 and convert this alone. can i not do this?
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yes, i do have a roll over IRA. I thought I can open a new account and contribute $5000 and convert this alone. can i not do this?

No, you can not.

Not in the way you want, which is to make the conversion completely tax free. You MUST include ALL of your IRA accounts, including SEP-IRAs, when figuring out how much of your Roth conversion is taxable.

--Peter
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