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1. Is the end deadline for 2010 Roth conversions Dec 31, 2010 or April 15, 2011?

2. Can I convert twice in 2010? Convert now with current funds in IRA and then later after 2010 deposits to IRA are made? Or is this a one time deal only?

Thanks
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1. Is the end deadline for 2010 Roth conversions Dec 31, 2010 or April 15, 2011?

Conversions must be completed in the calendar year. That is, by 12/31.

2. Can I convert twice in 2010? Convert now with current funds in IRA and then later after 2010 deposits to IRA are made? Or is this a one time deal only?

You can make multiple conversions.

Ira
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Can I ask a related follow up question?

DW and I each have 401k's only, and currently no IRAs of any type. DW recently switched jobs, and has a 401k ($70k or so) that could be rolled into an IRA, but we haven't done anything with it yet.

For 2009, both of us were covered by retirement plans at work. AGI for 2009 is ~$155k, MFJ.

For 2010, DW was covered by a retirement plan in January, but won't be for the rest of the year at the new job. I think that's a red herring, because for 2010, I expect our AGI to be above the $177k limit, so no Roth, and no deductible IRA would be available anyway.

To make up for DW not having a 401k this year, I'm looking for the best mechanism to set some additional money aside. It looks like 2009 is easy, because we're under the $166k AGI limit for Roth participation. We should just open accounts and each make a $5k contribution by April 15. For 2010, we'll be above the Roth limits, and would have to make non-deductible IRA contributions instead. If we DO NOT rollover DW's 401k, wouldn't it be trivial to convert those non-deductible contributions immediately into a Roth, with no tax consequence?

Just want to make sure I'm understanding all of this correctly.
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DW and I each have 401k's only, and currently no IRAs of any type. DW recently switched jobs, and has a 401k ($70k or so) that could be rolled into an IRA, but we haven't done anything with it yet.

For 2009, both of us were covered by retirement plans at work. AGI for 2009 is ~$155k, MFJ.

For 2010, DW was covered by a retirement plan in January, but won't be for the rest of the year at the new job. I think that's a red herring, because for 2010, I expect our AGI to be above the $177k limit, so no Roth, and no deductible IRA would be available anyway.


So far, so good.

To make up for DW not having a 401k this year, I'm looking for the best mechanism to set some additional money aside. It looks like 2009 is easy, because we're under the $166k AGI limit for Roth participation. We should just open accounts and each make a $5k contribution by April 15.

That works. Make sure you clearly label them as 2009 contributions and verify that is reflected on the receipt.

For 2010, we'll be above the Roth limits, and would have to make non-deductible IRA contributions instead. If we DO NOT rollover DW's 401k, wouldn't it be trivial to convert those non-deductible contributions immediately into a Roth, with no tax consequence?

Correct again. You're good to go. You have a little more work and thinking to do about DW. In order for your plan to work DW can't initiate any rollover of her 401(k) until 1/1/2011 at the earliest. First check with the plan to see that she can leave it there. Second, make sure that it's an attractive option. IOW, does she want to leave it there with its investment options and fees, or would she rather forego the 2010 Roth "contribution" in favor of doing better by rolling the 401(k) into an IRA?

Phil
Rule Your Retirement Home Fool
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1. Is the end deadline for 2010 Roth conversions Dec 31, 2010 or April 15, 2011?

Conversions must be completed in the calendar year. That is, by 12/31.

2. Can I convert twice in 2010? Convert now with current funds in IRA and then later after 2010 deposits to IRA are made? Or is this a one time deal only?

You can make multiple conversions.


My current plan is to make non-deductible 2009 IRA contributions to my wife's and my IRA account before April 15 and convert the IRAs to our respective and existing Roth accounts relatively immediately.

It appears from previous response that in order to get 2010 non-deductible IRA contributions into the Roth accounts, I would need to make the contributions and second conversions before the calendar year's end.

And the maximum non-deductible contribution to IRAs is $5000 per individual ($10,000 total) correct?

Relevant details:
2009 MAGI (MFJ) is greater than $176k. I'm gonna have to assume 2010 will be as well (although there's a good chance we could be well below that). I participate in my company's non-matching 401k. Spouse has no 401k at her part time job. We can't make direct Roth contributions anymore so I'm hoping to be able to get an additional $20,000 into them this year.

Any issues with the above plan?

Thanks for the information.
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Any issues with the above plan?

You haven't said one way or the other, so I will ask: Do either of you have any Traditional IRAs with pre-tax money, including rollover IRAs? If so, you cannot convert just the non-deductible contributions for 2009/2010. The conversion will be considered to be pro-rated across that individuals entire Traditional IRA portfolio.

For example, if your wife has a $40k Traditional IRA from the rollover of a previous pre-tax 401(k), and you contribute $10k for 2009 & 2010 to a non-deductible IRA for her, her total Traditional IRA portfolio is 80% pre-tax ($40k) and 20% after-tax ($10k). You will be taxed on 80% of any conversion that is made for her accounts.

AJ
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And the maximum non-deductible contribution to IRAs is $5000 per individual ($10,000 total) correct?

Correct if each of you is under age 50. Those 50 and older can contribute an additional $1000.

Ira
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Thanks guys.

We are under 50.

Yes there are existing funds in the IRAs, but they are so small that I plan to convert it all to the Roth. (Shame on me, but I haven't donated to them since.) I haven't yet looked up my basis on them. The only money currently in them is what I had to rechar back to the IRAs way back when Congress let us convert and spread the tax over four years, but I got snagged by income limits and had a hell of a time finding anybody who knew anything about recharacterizing. And naturally, there were some months that passed and the the tech bubble burst and the Schwab guys thought I was pulling some scam on them to avoid paying taxes on the full conversion amount.

That's when I learnt that you'd better dern well know your tax sitch-ee-ashun before you go an' do sumptin stupid.
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