topic Re: Roth IRA contribution in Retirement tax questions

Roth IRA contribution

Paisano — Thu, 15 Jul 2021 17:16:12 GMT

If I am not eligible to deduct a Roth IRA contribution AND am over 55, can I still contribute $7,000.00 to my old Roth IRA Account to grow tax free ?

Re: Roth IRA contribution

Destiny_Y_JD — Thu, 15 Jul 2021 18:11:09 GMT

I am going to assume that you are unable to deduct Roth IRA due to income limit (usual reason). Let me know if I am wrong.
I will start off by saying that for the 2020 & 2021 tax years (filed in 2021/22), the combined annual contribution limit for Roth and traditional IRAs is $6,000 ($7,000 if you're age 50 or older). That is unchanged from 2019.
There are still ways around the Roth IRA contribution limits. If you make a contribution to a nondeductible IRA, you can convert it to a Roth IRA. The same applies to nondeductible contributions made to a 401(k) plan.
A backdoor Roth IRA allows you to get around income limits by converting a Traditional IRA into a Roth IRA. Contributing directly to a Roth IRA is restricted if your income is beyond certain limits, but there are no income limits for conversions. This move is called either a conversion or "Backdoor roth". Instructions on how to do this at https://ttlc.intuit.com/community/entering-importing/help/how-do-i-enter-a-backdoor-roth-ira-conversion/00/25567.
However, one of our tax experts could also help you in this process.

Re: Roth IRA contribution

Paisano — Thu, 15 Jul 2021 18:12:33 GMT

Thank you. How do I engage one of your experts on a Web call asap ?

Re: Roth IRA contribution

Destiny_Y_JD — Thu, 15 Jul 2021 18:23:25 GMT

There are a few ways to contact us. You can visit https://turbotax.intuit.com/.

See how Live help works at https://turbotax.intuit.com/personal-taxes/online/live/how-it-works.htm

If you already have an account or filed with us before, you can follow these instructions:

Re: Roth IRA contribution

Opus 17 — Thu, 15 Jul 2021 18:34:05 GMT

You never deduct a contribution to a Roth IRA. That's the whole point.

If you are not eligible to make a Roth IRA contribution, you may be eligible to make a tax-deductible contribution to a traditional IRA. If you can't do that either, you can always make a non-deductible contribution to a traditional IRA. This would mean you can't deduct the contribution, your investment grows tax-free, but you pay tax when you withdraw. It's slightly better than putting the money in a regular investment account, but not much. It also causes paperwork problems when you withdraw from the traditional IRA.

A backdoor conversion is when you make a non-deductible contribution to a traditional IRA and then "convert" it to a Roth IRA. This is the only way to get money into a Roth account if you are not eligible to make Roth contributions. However, the rules are very complicated, and you really shouldn't even think about it unless you plan to convert all your funds in a traditional IRA at the same time, or you currently have no funds in a traditional IRA.