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Is the deductibility of my traditional IRA contribution at jeopardy if within the same year I convert a portion of that same IRA to a Roth? Note; I am aware of the phaseout thresholds.

Thanks,

Jim

  • But it's kinda silly because if you convert Traditional to Roth, that is (generally) taxable as income, so that will cancel out part or all of your deduction. If you're going to do that, why not contribute to Roth IRA instead of Traditional IRA (to the extent you would have converted) in the first place? – user102008 Dec 5 '14 at 11:21
  • @user102008 The obvious case is realizing late in the year that you wanted to be contributing to a Roth IRA instead of a traditional IRA. – Degustaf Dec 5 '14 at 20:16
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    @Degustaf: In that case you can re-characterize the contribution. – user102008 Dec 5 '14 at 20:18
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No relation whatsoever other than the phaseout limits.

  • I agree the conversion would negate the tax benefit, however I thought by showing the IRA deduction on line 32 of my 1040 it would lower my AGI. My belief was that a lower AGI should allow a larger conversion before hitting either a higher bracket or the phaseout threshold. – Jim Dec 6 '14 at 17:45
  • I agree the conversion would negate the tax benefit of the deduction, however I thought by showing the IRA deduction on line 32 of my 1040 it would lower my AGI. My belief was that a lower AGI whould allow a larger conversion before hitting either a higher bracket or the phaseout threshold. My goal is not merely short term tax savings but to convert the IRA balance incrementally over the next ~5 years. The pre-tax balances in my portfolio are too large and I want to lower my 70.5 RMD exposure. – Jim Dec 6 '14 at 18:10
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    @Jim what phaseout are you talking about? Phaseouts on conversions had been gone since 2010. – littleadv Dec 6 '14 at 22:47
  • I'm referring to the $181-191K(2013)Roth IRA contribution phase out for IRA contributions. The conversion is for a spousal IRA. I failed to mention that I am also contributing to a Roth myself and don't want to nullify it by converting too much of the traditional IRA in one year. – Jim Dec 12 '14 at 3:28
  • It turns out I was wrong about the traditional IRA deduction lowering my MAGI with regard to the phaseout eligibility. Worksheet 2-1, line 4 of IRS pub 590 has you add deductions back into the income calculation. – Jim Dec 12 '14 at 3:41

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