Can I transfer $ in a rollover IRA to my Roth IRA to meet my yearly Roth IRA contribution of $8000?

[SJH57]

Hello,

I am 66 (and retired) and in 2023, I transferred all the money (~200k) in my employer sponsored 401k and 4757b to a "rollover" IRA at Fidelity.  I wanted to make my yearly contribution to my Fidelity Roth IRA for 2024, and was wondering if I can use funds from the rollover acct ? The funds in my rollover IRA are pre-tax, so I'm not sure if there is a way to do this? thanks for any help - appreciate it! Steve

[VolvoGirl · Accepted solution]

You can convert from a Traditional IRA to a ROTH IRA.  But it would not be a new contribution.  It would be taxable and not a deduction.   You make a contribution from new money from your bank account etc.   And you need earned income from working and W2 or a net profit from self employment to contribute.  

[Opus 17 · Accepted solution]

You can’t make any new contributions to a traditional or Roth IRA unless you have compensation from working.  

You can rollover part or all of your pre-tax IRA to a Roth IRA, this is called a conversion, and you will pay income tax on the converted amount.  Conversions are not contributions and there is no dollar limit on conversions other than the tax you can afford to pay.  

[SJH57]

thank you for your response - looking ahead, I have a pension plan that pays monthly - will this allow me to contribute to my Roth IRA, or is that not considered income?

[VolvoGirl]

No you need income from wages like on a W2 or a Net Profit from self employment.  

[SJH57]

thanks for your response - to contribute to my Roth IRA, do I need a certin amount of income to qualify to contribute to the account?

[VolvoGirl]

Well you need Earned income as much as you want to contribute.  So if you want to contribute 6,000 you need 6,000 of earned income.  

IRS Pub 590-A IRA Contributions

https://www.irs.gov/pub/irs-pdf/p590a.pdf

[Opus 17]

You need compensation from work to make new contributions.  Compensation is wages from a W-2 job, or self-employment income, or a few other things that won’t apply to you (like combat pay or certain fellowships.)