Press Room: Article
ROTH IRAs – Life After Conversion
In December we featured an article on ROTH IRA conversions that covered the basics of conversion. This article discusses life after that conversion, including the benefits of annual conversions.
All taxpayers are eligible to convert traditional IRAs to Roth IRAs commencing January 1, 2010. Even though all taxpayers with wage income, alimony or self-employment income (collectively referred to as “earned income”) can contribute $5,000 (an additional $1,000 for taxpayers 50 or older) to a traditional IRA, they are not necessarily allowed to contribute directly to Roth IRAs; however, they are eligible to convert their traditional IRAs to Roth IRAs. With the use of a traditional IRA and nondeductible contributions, taxpayers with modified adjusted gross income greater than the prescribed limits can in fact put money into a Roth IRA.