Traditional IRA Contribution Wise After Already Completing Roth Conversion

[CJB-1959]

In 2024, I converted $75,000 from my 457(b) to my Roth 457(b) resulting in $15,000 in federal income taxes as well as additional state income taxes. If I make an $8000 2024 contribution to my traditional IRA  I can save $1825 in federal income taxes which would result in a refund vs. having to pay $1500 in additional federal income taxes. This would also reduce the amount we owe to the State of Minnesota.

Given I already did a Roth conversion does it make sense to now contribute to a tax deferred account after doing a Roth conversion in 2024?  It seems counterintuitive to do this but getting a refund vs. paying more now is tempting. I would appreciate your thoughts. Thanks.

[KeshaH]

Yes, you can make traditional contributions to your IRA even though you made a Roth conversion in the same year. This strategy will essentially help offset the tax on your Roth conversion.

[fanfare]

Your other option is to contribute $8,000 into a Roth IRA.

Your future self will thank you profusely for tax-free retirement income.

Presumably that was the motivation for the conversion in the first place.

@CJB-1959 

[CJB-1959]

Thank you for the feedback. I had no earned income last year so I am not eligible to make a new Roth IRA contribution. My wife did make a Roth IRA contribution so I am going to make the traditional IRA contribution as a spousal contribution. The contribution will result in a small federal tax refund and a reduction in our State income tax that is due.