Back Door Roth Contribution

[Jack from Ohio]

Client did a back door Roth contribution of $6,500.  He did the back door method due to high income.  He is over 60.

Can he do the same thing next year?  I seem to remember there being some limit to the number of times that non-deductible IRA contributions can be converted to ROTH.  However, I cannot find any information limiting the number of times this type of conversion is allowed.

Anyone have info that would help would be appreciated.

[Yardley CPA]

Hey, Jack....check out mistake 5 in the attached article.  It seems like he can make contributions each year, unless I am reading it wrong?

http://news.morningstar.com/articlenet/article.aspx?id=687449

[joanmcq]

You can do it each year. I've got clients that are taking advantage as long as the loophole is open 

[FDNY]

15 hours ago, Yardley CPA said:

Hey, Jack....check out mistake 5 in the attached article.  It seems like he can make contributions each year, unless I am reading it wrong?

http://news.morningstar.com/articlenet/article.aspx?id=687449

I've done 5 of these for a high earner until this year as he turned 70 1/2 last month.  I have authority over his brokerage account and I've avoided mistake 5 as the money was moved to the Roth when the deposit hit the non deductible IRA account.  1099R always had at most, pennies in earnings.   Is it possible to contribute this year and move it to the Roth the same day?  My thinking is no as this may be playing on the edge of the rules.   Would like to give him good news, as he likes my advice, such as "don't die with all your money in the bank" and "everything tastes better with bacon, even broccoli."

[Lion EA]

 

7 hours ago, FDNY said:

Would like to give him good news, as he likes my advice, such as "don't die with all your money in the bank" and "everything

You need to write Tax Tips in an e-Newsletter to your clients.  Especially about bacon!

[Pacun]

Just a simple question. Why not do a Roth IRA from the beginning if you know the IRA will be not deductible?

 

[jklcpa]

1 hour ago, Pacun said:

Just a simple question. Why not do a Roth IRA from the beginning if you know the IRA will be not deductible?

 

It's because contributions to the traditional IRAs aren't disallowed due to income limitations, they merely become nondeductible contributions and create basis in the IRA.  With the Roth IRA, there are specific income limitations that will not allow the direct contribution to the Roth, so to get the money into the Roth it is this 2-step process.