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I am now old enough for an IRA contribution of $7,000 per year with catch-up amount in 2019.

My income is too high to allow for a deductible contribution to a Traditional IRA or any contribution directly to a Roth IRA.

I do not currently have a traditional IRA(I do have an old Roth and an employer 401K).

If I put $7,000 after taxes (not deductible for me) in a Traditional IRA and within a week or so immediately roll it over into a new Roth, with minimal or no gain in the account during that week, it seems like there would be negligible tax implications (I am in a high bracket and likely to be there even in retirement.


You would pay taxes (at ordinary income rates) only on gains that would be converted. If there were little/no gains, there would be little/no tax due.

I know I will have to wait five years to take a distribution from this Roth without penalty

Not necessarily. Once you reach 59 1/2, if you have had ANY Roth IRA open for at least 5 years, your distributions will be qualified, so there is no '5 year clock' on the converted amount. And again, you don't have to open a new Roth IRA for this conversion. You may put the conversion directly into your 'old' Roth IRA.

Here are the requirement for qualified distributions from IRS Pub 590-B https://www.irs.gov/pub/irs-pdf/p590b.pdf

What Are Qualified Distributions?

A qualified distribution is any payment or distribution from your Roth IRA that meets the following requirements.

1. It is made after the 5-year period beginning with the first taxable year for which a contribution was made to a Roth IRA set up for your benefit, and

2. The payment or distribution is:
a. Made on or after the date you reach age 59 1/2,
b. Made because you are disabled (defined earlier),
c. Made to a beneficiary or to your estate after your death, or
d. One that meets the requirements listed under First home under Exceptions in chapter 1 (up to a $10,000 lifetime limit).


Assuming you have had your 'old' Roth IRA open for at least 5 years at the time you take the distribution, you meet requirement #1. If you are over 59 1/2 when you take the distribution, then you will meet requirement #2. So, unless you are currently under 54 1/2, then you won't need to wait 5 years to make tax-free withdrawals of any conversions you do.

AJ
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