I am making up below case with exaggerated numbers, in order to make questions clear.
Let me state IRS rule first:
If you are covered by a retirement plan at work, then these income restrictions apply:
A full deduction is available if your modified AGI is $68,000 or less for 2022 ($73,000 for 2023).
A partial deduction is available for incomes between $68,000 and $78,000 for 2022 ($73,000 and $83,000 for 2023).
No deduction is available for incomes greater than $78,000 for 2022 ($83,000 for 2023)
Case: If Mike (single, young, mid 30s) has a full time job with annual salary of $180k (employer sponsored pension plan), and he can contribute $6000 to traditional IRA, then convert all $6000 to Roth IRA (Backdoor Roth Conversion), since his traditional IRA contribution is not deductible at all (his income is over $78k).
Question: Now assume that Mike takes a part time job (also come with employer sponsored pension plan) with annual salary of $50k only. However, he has much more income from stock market, let us say Mike makes $500k from stock market (short term capital gain) in 2022. In this scenario, if Mike contributes $6000 to traditional IRA, is full $6000 not deductible at all? Can Mike convert all the $6000 to Roth IRA? Not sure if traditional IRA deduction depends on salary income only or total income (salary + stock capital gain).
Thanks.
