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Strategies & Market Trends : Value Investing
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To: Grommit who wrote (51257)4/9/2013 9:15:36 AM
From: Jurgis Bekepuris1 Recommendation  Read Replies (1) of 78688
 
Because anyone, regardless of income, can make non-deductible contributions to a Traditional IRA. And since there's no longer an income limit on Roth conversions, they can immediately convert those non-deductible contributions to a Roth IRA.
I am not a tax man.

You should be careful. The above is true. But only if you don't have a traditional IRA or equivalent (rollover IRA/etc.). If you do, when you convert to Roth IRA, you cannot cherry pick which contributions you are converting. So if you have 100K in traditional IRA that was deductible and you just contributed 10K to a new traditional IRA that is non-deductible, and then tried to convert 10K into Roth, this 10K will be composed from 90% deductible contributions and 10% non-deductible contributions. In other words, you will have to pay tax on 90% of conversion.

As said above, I am not a tax man. Consult someone who is. :)
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