Q. I made $2,000 contribution to non-deductible traditional IRA this year before April 15, this is counted as last year's contribution. If $2,000 grows to $2,100 due to earning and later this year I convert it to Roth IRA, does it count as this or last year's IRA contribution? How do I pay tax on this conversion?
A. Your conversion will not be counted as current year IRA contribution, in fact it will not impact your annual IRA contribution limit at all. Your eligibility for Roth IRA contribution is still subject to your income level.
Since the money is from a non-deductible traditional IRA account, you already paid tax on your $2,000 contribution. When you convert $2,100 to Roth IRA, you only have to pay tax on the earning part.
A. Your conversion will not be counted as current year IRA contribution, in fact it will not impact your annual IRA contribution limit at all. Your eligibility for Roth IRA contribution is still subject to your income level.
Since the money is from a non-deductible traditional IRA account, you already paid tax on your $2,000 contribution. When you convert $2,100 to Roth IRA, you only have to pay tax on the earning part.
RSS Feed
