Rollover To Roth IRA – Are You Eligible?

2007-03-08 10:33:40

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You must be considering how to take advantage of Roth IRA rollover benefits. Conversion or rollover to Roth IRA means that you transfer your money or property from a traditional IRA to a Roth IRA. But before you assess whether you’ll benefit from a Roth IRA rollover, you need to know the IRA rollover rules on eligibility.

If you are filing your income tax return separately from your spouse, you generally cannot rollover to Roth IRA. Under IRA rollover rules, you are only allowed rollovers if you live apart from your spouse for the whole year and you still meet the other requirements of Roth IRA rollover.

Whether you are single, or married filing jointly with your spouse, your modified adjusted gross income (income after certain deductions are allowed and modified to add back certain items that are excluded) must not be greater than a hundred thousand dollars to be eligible for rollover to Roth IRA. This limit applies only to the year Roth IRA rollover is executed and not at some other year.

IRA rollover rules require that you can rollover to Roth IRA only an existing IRA (traditional IRA, SEP IRA, or another IRA). You cannot convert your employer plan directly to Roth IRA. However, you can roll your employer’s plan to a traditional IRA; and, from traditional IRA you can subsequently proceed to rollover to Roth IRA.

Even if you made a rollover within the previous 12 months, you can convert your entire traditional IRA at once. Or, you can choose to convert only a part of the traditional IRA. However, you cannot roll only the nontaxable part of a traditional IRA. And if you acquire an IRA through inheritance from a person other than your spouse, you are not permitted to rollover to Roth IRA.


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