I have traditional roth but I am not eligible to have tax deduction since my spouse and my income total exceed the limit. should we convert my traditional to roth ira?

[DanielV01]

It's a great tax strategy, yes.  This technique is called a back-door Roth contribution.  When your income is too high to make a direct contribution to a Roth IRA, and your income is too high to make a deductible Traditional IRA (TIRA) contribution (which is what I believe you meant to say), making a nondeductible TIRA contribution, and then immediately converting the contribution to a Roth IRA is the tax strategy to make the Roth contribution anyways.  There is an extra reporting requirement (Form 8606, which TurboTax will help you to prepare), and another caveat is that if your contribution is for 2017, but made in calendar year 2018, then the conversion must be reported for tax year 2018 (next year).  But even with these extra reporting requirements, a Roth IRA is superior to a nondeductible TIRA for several reasons.  One, you do not have to track your basis in a Roth (but you do with the nondeductible TIRA).  TIRAs are subject to Required Minimum Distributions (RMDs), but Roths are not.  And, when you are over 70 1/2, you may still contribute to a Roth, but you cannot contribute to a TIRA.

[keiji2011tax]

Thank you. But I found this information during I was waiting for your answer at IRS Website. So I cannot recharacterize any more?

Can I recharacterize a rollover or conversion to a Roth IRA?

Effective January 1, 2018, pursuant to the Tax Cuts and Jobs Act (Pub. L. No. 115-97), a conversion from a traditional IRA, SEP or SIMPLE to a Roth IRA cannot be recharacterized. The new law also prohibits recharacterizing amounts rolled over to a Roth IRA from other retirement plans, such as 401(k) or 403(b) plans.

[macuser_22]

Do you mean a Traditional IRA?  There is no such thing as a "Traditional Roth".

A Traditional IRA to Roth is a *conversion* which is total different than a recharacterization.  The new tax law says that once you convert a Traditional IRA to a Roth you can no longer "change your mind" and move it back to the Traditional IRA (recharacterize) - once it is converted it stays converted.

[keiji2011tax]

Yes I meant was Traditional IRA.  Thank you very much for explanation conversion and recharacterization. I was not understanding the difference.  So I have Traditional IRA account since 2015, but no longer eligible to use it for tax deduction, so I should as the bank to "convert" my Traditional IRA to Roth IRA. Am I understanding correctly now?

[macuser_22]

Yes. You can make a non-deductible Traditional IRA contribution and then convert that to a Roth. You will get a 1099-R for the distribution and report that as a Roth conversation - not a recharacterization. You must report the Traditional IRA contribution as not-deducible in the IRA contribution interview which will produce a 8606 form to track the non-deductible basis that will offset the tax on the conversion, provided that you do not have any year end Traditional IRA value. Backdoor Roth's do not work if you have other Traditional IRAs.

[keiji2011tax]

Thank you. Do you think I should file as non-deductible Traditional IRA contribution for 2017 instead of requesting a conversion that to a Roth now? The bank told me that it is still possible to convert to a Roth for 2017.

[fanfare]

If you wait and your IRA generates earnings, those earnings will be taxed when you do the conversion. For that reason, most persons don't wait.

[dmertz]

Bank employees are notoriously unreliable sources of information regarding the tax code.  Roth conversions are performed *in* a particular year, not *for* a particular year.  A Roth conversion is taxable on the tax return for the year *in* which the distribution from the traditional IRA occurs.  Any money presently in a traditional IRA cannot now be distributed in 2017 since 2017 is in the past.