I have one from several years ago and I’m leaving it alone. It’s not much but just in case the whole Roth thing goes sour a couple decades from now, I’d like to know I “diversified” my IRA’s like I “diversified” my portfolio!!!

If you’ve paid taxes on the dollars already then it should be a “completely free process”.

I was hoping this was about contribution amount limits being lifted!!!

I have a SIMPLE IRA thru work, but the plan sucks. I only do it for the matching. However, it has something like a $12,000 contribution limit.

Roth IRA’s are still stuck at a pathetic $5,000 (or $5,500 or whatever it is today).

Why in the world do they have a problem with folks contributing MORE to their IRA than $5K???? I’d think that would be especially helpful to the markets especially after the last 2 years.

(face palm)

Can You Contribute to a Roth IRA?
Generally, you can contribute to a Roth IRA if you have taxable compensation (defined later) and your modified AGI (defined later) is less than:
· $176,000 for married filing jointly or qualifying shown on Form 8839.
widow(er),
· $120,000 for single, head of household, or married filing separately and you did not live with your spouse at any time during the year, and
· $10,000 for married filing separately and you lived come, such as your deduction for medical and dental
with your spouse at any time during the year.

Page 56 of IRS Pub 590: “your Roth IRA contribution limit is reduced (phased out) in the following situations: …” married filing jointly and AGI is greater than $177k or more, and single (or other tax filing status) and AGI is $120k or more.

HOWEVER, a person can make a non-deductible IRA contribution AND THEN convert that non-deductible IRA to a Roth, at any income level.

I also have a SIMPLE IRA (falls into ‘traditional category) also which I haven’t contributed to in 5 years.

? Can I roll the SIMPLE IRA into the already existing ROTH IRA (and pay the taxes) and ALSO make my $5000 contribution for the year?

It’s a somewhat simple question yet I have looked and cannot find a clear answer elsewhere.

When I first created the ROTH, $20k went in that year as a rollover which obviously is above the annual limit so I wonder if I can do something like that again.

thanks in advance to anyone who knows!!

Roth conversions, starting in 2010 and moving forward, do not have MAGI limits. However, those above a certain MAGI (e.g. $177K for married filing jointly), cannot contribute to a Roth IRA.

Thus, anyone above the MAGI limit should make non-deductible contributions to a Traditional IRA and later convert them to a Roth.

What’s New for 2010
Modified AGI limit for Roth IRA contributions in- creased. For 2010, your Roth IRA contribution limit is reduced (phased out) in the following situations.
• Your filing status is married filing jointly or qualifying widow(er) and your modified AGI is at least $167,000. You cannot make a Roth IRA contribution if your modified AGI is $177,000 or more.
• Your filing status is single, head of household, or married filing separately and you did not live with your spouse at any time in 2010 and your modified AGI is at least $105,000. You cannot make a Roth IRA contribution if your modified AGI is $120,000 or more.

The balance of all IRAs is looked at when converting, so you can’t just open a new traditional IRA, make non-deductible contributions, roll it over to a ROTH, and call it a day.

If you have 100k in a traditional IRA, and open a new IRA ($5000) for the purposes of rolling it over to a ROTH, you’re going to owe taxes as if 95% of the conversion ($4750) was taxable.

Note that SIMPLE and SEP IRAs are all considered IRAs for the purposes of the pro-rata tax calculations.

These considerations make using this strategy non-viable for many people, but if it works out for you, then by all means go for it.