A Roth IRA conversion is a movement of assets from any of the following accounts to a Roth IRA.
- A traditional IRA
- A SEP IRA
- A SIMPLE IRA. This is permitted only if it has been at least two-years since the first contribution was deposited to the Roth IRA owner’s SIMPLE IRA.
- An account under a qualified plan, 403(b) plan, 403(a) qualified annuity plan, or governmental 457(b) account. In order to convert funds from these accounts to a Roth IRA, the individual must first satisfy requirements to make withdrawals from the account (i.e., experience a triggering event) and the amount must be rollover eligible. The option to convert assets from these a counts to a Roth IRA became effective January 1, 2008[1].
For the purpose of this tutorial, these accounts are referred to as the ‘delivering accounts’.
Roth Conversion Eligibility Requirements
An individual can completed a Roth IRA conversion whether or not she has income/compensation for the year.
For Roth conversions that are done before January 1, 2010, the Roth IRA owner must meet the following requirements:
- Have a modified adjusted gross income (MAGI)-or joint MAGI if married- that does not exceed $100,000
- Does not have a tax filing status of married-filing-separately.
These limitations are repealed effective January 1, 2010.
No other limitations or eligibility requirements apply to a Roth IRA conversion. But, see reconversion
