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Author: Kebry Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121106  
Subject: Roth Conversion Date: 3/7/1998 1:21 AM
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2 questions please:

1) If I have a traditional IRA that contains both deductible and non-deductible contributions, can I convert just the non-deductible contributions to a Roth IRA and leave the earnings and the deductible contributions in the traditional IRA?

2) I want to put my 1997 contribution in a deductible IRA and then immediately convert it to a Roth IRA. I want to do the same thing with my 1998 contribution later on this year. Can I convert it into the same account as my 1997 conversion and am I violating any once-a-year rollover rules?

Thanks to anyone who can help me.
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Author: KATinChicagoland Three stars, 500 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 2477 of 121106
Subject: Re: Roth Conversion Date: 3/7/1998 4:51 PM
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<<1) If I have a traditional IRA that contains both deductible and non-deductible contributions, can I convert just the non-deductible contributions to a Roth IRA and leave the earnings and the deductible contributions in the traditional IRA?>>

Regrettably the answer is no. Any amount you remove from a regular IRA is considered to come proportionately from non-deductible contributions and other amounts (taking into account all regular IRAs you own). And this rule applies to amounts you remove for purposes of a rollover to a Roth IRA.

<<2) I want to put my 1997 contribution in a deductible IRA and then immediately convert it to a Roth IRA.>>

The law permits this, provided you qualify for the conversion (modified adjusted gross income does not exceed $100,000 and you are not married filing separately).

<<I want to do the same thing with my 1998 contribution later on this year. Can I convert it into the same account as my 1997 conversion and am I violating any once-a-year rollover rules?>>

The reason for doing this, I suppose, is to get a deduction for $2,000 for the 1998 contribution to the regular IRA and then spread the corresponding income over four years when you make the conversion. I'm not sure whether this will be permitted. You may want to wait until the technical corrections come out in a few weeks before trying this maneuver. If it is permitted, you will not violate the once-a-year rollover rule, however. That rule is designed to prevent you from rolling the same money twice, but permits multiple rollovers if each one involves different money. So you can roll IRA A to IRA C and then roll IRA B to IRA C in the same year.

KAT in Chicagoland
www.fairmark.com
Tax Guide for Investors
Now featuring Roth IRA information


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