Question about Traditional IRA Deduction

VAer — Tue, 10 Mar 2026 07:25:02 GMT

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.

Re: Question about Traditional IRA Deduction

Bsch4477 — Sat, 10 Dec 2022 03:53:25 GMT

The deduction depends on total income including investment income.

Re: Question about Traditional IRA Deduction

fanfare — Sat, 10 Dec 2022 04:54:55 GMT

a) you can elect to make your IRA contribution non-deductible, in which case it doesn't matter what your MAGI is.

b) if you wish to convert tax free to Roth, your entire value of all your IRAs must be no more than your basis which is the non-deductible part,

Otherwise it cannot be 100% tax free because a Traditional IRA distribution or conversion always has a basis fractional part and a taxable fractional part as calculated on Form 8606.

@VAer

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