The Tax Resources Blog

Archive for February, 2004

Irs Roth Ira

Question: If I contributed to a trad IRA, but the IRS taxed me on it, so can I convert it to a Roth penalty free?

I started a traditional IRA last year, but the IRS said I wasn’t eligible to do so. What happens to that money? They’re taxing me on the income, so will it have to stay in the traditional IRA or can I convert it to a Roth without penalty since they’re taxing me on it? PS-I hate the IRS

Answer: You have to be eligible for a Roth, first.

So if you are eligible, yes, you can convert it but you’ll have to pay the tax on any earnings beyond the initial contribution.

If you’re not eligible you’ll have to wait ’til 2010.

NBR | Tax Tip 3 A Roth Do-over | PBS