I would like to roll over my wife's 457b retirement account into her Roth IRA in 2017. I understand that the amount in the 457b will be taxed, but does it also count as income that affects the ability to contribute to a Roth IRA? For instance:
- We live in and are citizens of the United States.
- We are married filing jointly and are under the age of 50.
- The 2017 Roth IRA max income limit is $186,000-$196,000.
- Our annual AGI is $120,000.
- The 457b account has $80,000.
Is it correct that if we do a 457b to Roth IRA rollover, we will be taxed as if we made $200,000 ($120,000 income + $80,000 457b)?
Also, does it mean that we will no longer be able to contribute the standard $5,500 to our Roth IRAs for 2017 because our income is now $200,000 (which is greater than the Roth IRA max income limit of $196,000)? Or is the rollover not counted as income when looking at eligibility to contribute to a Roth IRA?