Mar 4

I am allowed a $5000 Roth contribution. I want to take $2000 from my traditional IRA and convert it into an existing Roth IRA. Can I put in $5000 PLUS the $2000 conversion, or does the conversion limit my contribution to only 3000 additional dollars this year?

2 comments so far...

  • efflandt Said on March 4th, 2010 at 5:46 pm:

    Conversions are separate from contributions. You have to pay income tax on the amount converted, but it is best to do a direct transfer and tell them not to withhold anything and pay the tax with other money. Otherwise the withholding would be subject to 10% penalty (if under age 59.5). Each converted amount has to remain in the Roth IRA for 5 years to avoid penalty. So you can still contribute the full annual contribution limit (which is a grand total for any and all types of IRA’s).

  • Mike Said on March 4th, 2010 at 6:00 pm:

    Your conversion amount does not count toward your contribution limit of $5,000, $6,000 if your over 50. There is a current income limit of $100,000 to qualify for a Roth conversion. If your over that income you can wait until 2010 when there is no income limit.

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