From Melinda May, CPA | Featherstone
A Fredericksburg Today Partner
Roth IRA conversions generate tax bills if pretax dollars are moving into an after-tax account. That may not be the case if only after-tax dollars are being converted.
Example 4: Suppose that Carol Davis from example 3 is 55 years old. She contributes $6,500 to a nondeductible traditional IRA for 2018. Carol has no pretax money in any other traditional, SEP, or SIMPLE IRA. If she converts that $6,500 to a Roth IRA, Carol will owe no tax. She will have made what’s known as a back-door Roth IRA contribution and will get around the income limits.
Featherstone LLC provides Tax Planning & Preparation, Accounting and CFO Consulting. Please contact the company by email at [email protected] or by calling 540-227-4321.
