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 Strategies & Market Trends : BAK - Investing

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To: xxyy who wrote (1859)4/12/2012 2:25:54 PM
From: CovenantRead Replies (1) of 3143
 
re: nondeductible IRA / W

I don't know the rules which is why I'm asking. My beliefs are:

  • There are no maximum income restrictions for non-deductible IRAs. Minimum restrictions are you have to have earned at least the amount contributed or have spousal income if no income earned yourself.
  • There are no income restrictions for IRA to ROTH conversions.
  • An unlimited amount may be converted from IRA to ROTH in any single year.
  • This is a loophole which allows people who cannot deduct an IRA contribution or contribute to a ROTH in effect contribute to a ROTH by first contributing to a non-deductible IRA and then immediately converting.



I was thinking of converting next week and then investing the proceeds in fine quality firms.

My followup question involves the 5 year rule for withdrawing the contributions. I have ROTH IRAs segregated by contribution year because I want to have the flexibility to be able to withdraw funds after 5 years. If I was to combine the ROTH accounts, would withdrawal ability be keyed to the oldest contribution or the newest year. i.e. If was to combine a $4000 2006 account and a $6000 2012 account, would I be able to withdraw $0, $4000, or $10,000 if I needed the money later this year?
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