I have contributed $5,500 to a Roth IRA for tax year 2014.

My income is variable due to a variety of factors throughout this year, so I do not know whether my income will be within the limits for deductions of IRA contributions.

I am assuming I can call my provider at any point prior to my income taxes being due and re-characterize the Roth IRA into a traditional IRA, if my modified AGI is below the limits.

It seems painless, but I want to make sure there are not things I am missing.

  • What things do I need to be aware of if I choose to do this?

2 Answers 2


Usually, when income cannot be reliably estimated and you worry about the limits - you should contribute to Traditional IRA. Then, if you cannot deduct - you chose whether to re-characterize (if you're within limits for Roth), or convert (if you're not within limits for Roth) to Roth. The reason is that you can always contribute to Traditional IRA, the income limits only affect the tax deduction.

Another option is to wait till the year ends and contribute when you already know how much your income was. You can contribute to IRA for year X by April 15th of the year X+1.

So in your case, since you contributed to Roth, you need to keep in mind that you may be over the limits for Roth contributions and over the limits for Traditional IRA deduction - and you will still have to re-characterize to Traditional IRA, so that you convert back to Roth through the "loophole".

  • From what you describe, contributing to Traditional IRA or Roth IRA are both equally flexible.
    – user102008
    Aug 5, 2014 at 10:54
  • 1
    He linked to the limits for if he himself is covered by a retirement plan at work. In that case, if he is near the income limits for deducting Traditional IRA contributions, then he is far below the income limits for contributing to Roth IRA.
    – user102008
    Aug 5, 2014 at 10:55

You only have income limits for deducting Traditional IRA contributions if you are (or were sometime during the year) covered by a 401k at work (or your spouse is). If so, then the Traditional 401k already provides plenty (much higher than the IRA contribution limit) of ability to do pre-tax contributions.

Also, if you yourself (as opposed to just your spouse) are covered by a 401k (which seems the case because that's the limits you linked to), then the income limits for deducting Traditional IRA contributions are pretty low ($60-70K for single, $96-116K for married filing jointly). At those incomes, the marginal tax rate is 25%. It's probable that you will make more in the future and be in the 28% bracket. In that case, Roth contributions might make more sense anyway (Roth is better if your tax rate now is lower than in the future).

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