Roth IRA income limits

[jamesrath1970]

We plan on converting a portion of a traditional IRA to a Roth IRA.  If the amount we convert plus our other income exceeds the cap of $193,000, are we prohibited from make a contribution to a Roth IRA? For example, say our MAGI was $130,000 and we converted $100,000, is the $100,000 added to MAGI?

[macuser_22]

The amount of a Roth conversion is subtracted from AGI to get the MAGI - see worksheet 2-1 in IRS pub 590A

https://www.irs.gov/publications/p590a#en_US_2018_publink100025085

[Bsch4477]

See other replies 

[NCperson]

can we go back to the original post?  Are we mixing terminology for a 'contribution' and a 'conversion'?

The contribution is subject to the MAGI of $193,000 (new money going into a ROTH)

But

the 'conversion' of money already in a Traditional IRA to a Roth IRA has no limit; you could convert the whole ball of wax in one year, no matter how big it is,  if you wanted to. 

@jamesrath1970 - are you trying to do both a conversion and a contribution? or were you mixing terms inadvertently? 

[macuser_22]

The original question (as I understood it) asked if they did a Traditional IRA to Roth *conversion* would that conversion be added to the MAGI to limit a separate Roth *contribution* in the same year.   The answer is no, as the IRS Pub 590A MAGI worksheet 2-1  says, a conversion is subtracted from the AGI to determine the MAGI for Roth contribution limits so the amount of conversion does not count.

(TurboTax follows that rule - Traditional IRA to Roth conversions  are not added to the MAGI for the purpose of limiting Roth contributions.)

[dmertz]

To be precise, the taxable amount of the Roth conversions adds to AGI and one of the modifications to AGI for the purpose of a Roth IRA contribution is to subtract that amount back out.  So if your AGI is $130,000 and $100,000 of that comes from a Roth conversion your MAGI for Roth IRA contribution purposes is $30,000, assuming no other modifications.  As macuser_22 indicated, TurboTax implements this properly.

[jamesrath1970]

Thank you!