I'm making 220k in 2018 and I want to contribute to try IRA! is this contribution deductible ?
Can I convert it to ROTH IRA back door ROth ira? How long I have to do so for 2018?
1) A Traditional IRA deduction is not limited by income unless you are covered by a retirement plan at work (usually indicated by box 13 on your W-2). If you are so covered then yiu can still make a non-deductible contribution.
https://www.irs.gov/Retirement-Plans/IRA-Deduction-Limits
2) A 2019 "Backdoor Roth" only works if your total 2019 year end value of all existing Traditional, SEP and SIMPLE IRA accounts that might exist is zero, otherwise any non-deductible basis must be prorated over the entire ending value and only a portion of the conversion would not be taxable.
3) You had until December 31, 2018 to do a 2018 Roth conversion. Any conversion in 2019 is a 2019 conversion reported next year in 2020.
Im not understanding numner2.can u please simplfy amd or example?
Can my non working wife open post tax contribution traditional ira 2018 and do conversion in 2019 even i have my own traditional post tax contribution 2018 and im willing to do vonversion adding we will file married jointly and my wage exceed 220k ?
1)
You can NEVER withdraw ONLY the nondeductible part - it must be prorated over the entire value of ALL Traditional IRA accounts which include SEP and SIMPLE IRA's. (For tax purposes you only have ONE Traditional IRA which can be split between as many different accounts as you want, but for tax purposes they are all added together).
For example using rough figures: if you had $60K of nondeductible contributions in an IRA with a total value of $600K (10:1 ratio), then when you take a $60K distribution from any IRA account $6,000 would be nontaxable and $54,000 would be taxable (same 10:1 ratio) , with the remaining $54K of basis staying in the IRA for future distributions. As long as there is any money in the IRA, there will be some basis.
TurboTax will ask for your non-deductible "basis" and then the *Total Value* of *all* Traditional IRA, SEP and SIMPLE accounts as of Dec 31, of the tax year. That is so the prorating of the basis can be properly proportioned between the current years distribution and the remaining IRA value. That is done on the 8606 form.
2)
Yes, On a joint return as long as one spouse has sufficient taxable compensation then the spouse can also contribute to their own IRA.
It is automatic.
It is automatically created when:
1) You make a new non-deductible Traditional IRA contribution.
2) You take a distribution from a IRA that has a after-tax "basis".
3) You make a conversion of a retirement account to a Roth IRA
If none of those occurred, then the last filed 8606 remains in effect