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Author: fontyc Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 75379  
Subject: Roth Conversion + low AGI Date: 1/30/2000 11:21 PM
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I have 2 questions. I think I know the answer to the first.

1. What is the deadline for converting traditional IRA funds to a Roth IRA for tax year 1999?

2. This question is a little more complicated. My wife and I have 3 traditional IRA's. My business provides us with enough deductions that we qualify for Earned Income Credit. Some tax years I have NOT taken some deductions just to keep my AGI high enough to maximize the EIC. Now the question. Are there any rules that prevent me from making the conversion from traditional IRA to Roth? Makes sense to me. I may have a situation where I could avoid the taxation on the conversion.

I could really use some help here as I cannot find anyone at the IRS who might be smart enough to give me an answer. Thanks in advance.

fontyc
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Author: TMFPixy Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 18504 of 75379
Subject: Re: Roth Conversion + low AGI Date: 1/31/2000 9:45 AM
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Greetings, Fontyc, and welcome. You asked:

<<1. What is the deadline for converting traditional IRA funds to a Roth IRA for tax year 1999?>>

The deadline was December 31, 1999, which has already passed. Any conversion done now will be for tax-year 2000.

<<2. This question is a little more complicated. My wife and I have 3 traditional IRA's. My business provides us with enough deductions that we qualify for Earned Income Credit. Some tax years I have NOT taken some deductions just to keep my AGI high enough to maximize the EIC. Now the question. Are there any rules that prevent me from making the conversion from traditional IRA to Roth? Makes sense to me. I may have a situation where I could avoid the taxation on the conversion.>>

As long as your modified adjusted gross income is $100,000 or less, then you may make a conversion to a Roth. While the income you must declare counts towards your taxable income, it is not included in determining your AGI for the purposes of meeting the AGI limits for conversion. So, if your AGI before a conversion occurs is $100k, then you may convert a traditional IRA of $25K for example. After the conversion, your AGI would be $125K because of the conversion, and you would be taxed accordingly. Also, that additional income may or may not affect your tax situation regarding the EIC. That's a question you should pose to your tax advisor.

Regards..Pixy

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Author: fontyc Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 18527 of 75379
Subject: Re: Roth Conversion + low AGI Date: 1/31/2000 4:45 PM
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Pixy,

I am new to the boards so it is nice to get a reply so quickly. Thanks for the info.

fontyc

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