NON DEDUCTIBLE IRA CONTRIBUTIONS
NON DEDUCTIBLE IRA CONTRIBUTIONS SHOULD BE MADE TO EXISTING TRADITIONAL IRA? OR SHOULD A NEW IRA BE OPENED JUST FOR NON DEDUCTIBLE FUTURE CONTRIBUTIONS? FUTURE IDEA IS TO CONVERT NON DEDUCTIBLE CONTRIBUTIONS AND EARNINGS TO ROTH.
IF NON DEDUCTIBLE CONTRIBUTION MADE TO EXISTING IRA WON’T A RATABLE PORTION OF EXISTING IRA HAVE TO BE CONVERTED TO ROTH ALSO AND BE TAXED?
IRVIN B. NISSEN
847-624-7510
Permalink Submitted by Alan - IRA critic on Wed, 2019-03-27 18:50
Yes, but the same thing with happen if you contribute to a new TIRA. All your TIRA accounts are treated as one combined account regardless of how many you have or which one received your non deductible contribution. That said, if you are able to roll your pre tax IRA balance to your employer plan, you can then convert the non deductible contribution to a Roth IRA tax free. If you are able to do this rollover of the pre tax balance, then you might as well open a new account for your non deductible contribution, then roll the entire older IRA balance to your employer plan. Make sure your employer plan will accept an IRA rollover before you convert since you can no longer reverse a conversion.