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Author: DarrellK One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 120820  
Subject: Re: Educational IRA Date: 8/14/1998 11:49 PM
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rbm writes:
I want to make a $500 contribution to an educational IRA for my grandson during 1998. I am believe I am eligible but want to verify that my modified agi will meet the requirements. Regular income for 1998 will be in the $45K range but I will also have 1/4 of a Roth IRA conversion which will be taxed for this year that will put me in excess of the $95K to $110K phaseout level for single taxpayers. Should the 1/4 of the Roth Conversion be included in my modified AGI for purposes of eligibility to contribute to the educational IRA? Thanks for any help.

I'm afraid the conversion income *is* included in your modified AGI for determining eligibility to contribute. See IRS Publication 553, page 38:
http://www.fedworld.gov/pub/irs-pdf/p553.pdf

One alternative is that you could make a $500 gift to your grandson or his parents, and they could make a $500 contribution to the education IRA. The limit is $500 per year total contributions for each beneficiary (child), so if they're already contributing $500 you wouldn't be allowed to contribute regardless of your AGI.

- Darrell
(not a tax expert...check with your tax advisor)
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