Roth IRA Contribution

[user17715334666]

My husband is 55 years old. Turbo Tax is telling me that he has Roth excess contributions of $8,500.

What is his contribution limit if he is not opening any other IRA?

[MinhT1]

It depends on the MAGI. For the calculation of the Modified AGI for Roth IRA purposes, please see Worksheet 2-1 contained on page 41 of this IRS publication.

Please see the MAGI limits in Table 2.1 Effect of Modified AGI on Roth IRA Contribution on page 42 of this IRS publication.

[user17715334666]

Thanks. Yes the MAGI is over the limit.  

Can he convert some of the IRAs from past years  to Roth IRAs or is this also limited by MAGI? 

[RogerD1]

No, converting traditional IRA funds to Roth IRA funds is not income limited.  However, you need to be really cautious with these conversions because the converted amount will be considered taxable income in the year of the conversion.  If you try to convert too much at once, your income could get pushed into a higher tax bracket which will cause you to owe a significant amount of tax on the conversion.

Also, you will want to try to pay the tax on the conversion from your own savings or taxable brokerage accounts and not with the IRA funds, because using the IRA funds will generate an additional 10% penalty for withdrawing prior to age 59.5 years old.  You will also want to pay an estimated tax to the IRS (and your state also, if they have an income tax) at the time of the conversion - this will help reduce or eliminate an underpayment penalty when you file your taxes for the conversion.

[user17715334666]

Thank you!

So as he is not able to contribute to a Roth IRA this year, Can he still contribute to a regular IRA? 

Turbo Tax says "Based on what you've entered you don't qualify for an IRA deduction"  Is it that it won't reduce my taxes this year but can we still contribute?

[MinhT1]

Yes, you can recharacterize the Roth contribution to a Traditional IRA by asking the custodian to do a trustee-to-trustee transfer, moving the Roth contribution plus any earnings to a Traditional IRA before April 15, 2026. Then also before that date, you can do a back-door Roth conversion.

Please read this TurboTax Help article on the recharacterization

Please also read this TurboTax Help article on the back-door Roth conversion.

[user17715334666]

We haven't open the IRA or Roth IRA.  

So can he open a Non deductible IRA and do the back-door conversion to a Roth IRA?

If he has other IRAs, how the back door conversion be done?

[MinhT1]

Talk to your broker. He can guide you.

If you have other IRAs, you can just convert them to a Roth IRA. If the IRA has no basis (i.e. a deduction was taken at the time of contribution, then the conversion is taxable,