We usually contribute to a Roth IRA, but our income is variable enough that sometimes our MAGI is over the limit. In this case I want to contribute the full amount (post-tax) to a traditional IRA and then immediately transfer to the Roth IRA. Is this a way around the MAGI limit? It seems like this is either not legal, or there is some other downside to doing this since it seems like I will have completely bypassed the limit. What am I missing?
Edit to clarify: If I am below the MAGI limit, I put $5,500 post-tax directly into a Roth. If I am above the limit, I put $5,500 post-tax into a traditional IRA. Then I immediately transfer it to a Roth. Since I move it right away, there is no gain, and therefore no tax. The effect appears to be the same. So, the question is: Why does the MAGI limit on the Roth exist if it can be bypassed by putting the money into a traditional IRA and then moving it immediately to a Roth? Is this a loop-hole, or is there a reason that one cannot or should not convert to a Roth immediately?