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My wife is planning to withdraw $6700 from the inherited annuity in 2019. This would be approx. 1/3 of the $20,000 NYS exclusion since there were 3 daughters that inherited the annuity.

So, it's not clear to me if the extra $33.33 would be taxable, or, since she's over the age limit, she could just count that as part of her total income from annuities.

These three total to about $15578.80.
That means if she wants to convert some of one of her personal Traditional IRAs to a Roth she would be limited to the $20,000 limit and therefore could only convert about $4400 ( round numbers).
Please let me know if I am I understanding this correctly?

It seems correct to me, unless she is willing to pay NYS tax of 4%+ on any additional conversion. Just to point out - if you have Traditional accounts that you want to convert and you meet the age requirement, you could use $20k also. That would help you, as a couple, adjust your overall mix of Roth vs. Traditional, if that's what you're trying to do. Note that it's $20k per person, and each person has to calculate their amount separately - you can't 'borrow' some of your spouse's exemption.

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