In 1998 I converted a regular IRA to a Roth IRA and took advantage of the IRS's provision to spread the taxes over four years. This year, 2001, is the last year in which I will pay taxes on my 1998 conversion.

Is the 1998 conversion amount (appearing on line 15b on my 2001 Form-1040) excluded from the $100,000 modified AGI limit test to determine if I am eligible for a 2001 Roth IRA conversion?

I realize a 2001 Roth IRA conversion is excluded from the test, but I was not sure if a 1998 conversion (applicable to this year) was also excluded.

Interesting question. I'm not a Roth IRA expert, so another opinion may be more valid. However, under 408A©(3)©(i) and 1.408A-3, q&A 5, it states that "...modified AGI is the same as adjusted gross income under section 219(g)(3)(A)(used to determine the amount of deductible contributions that can be made to a traditional IRA by an individual who is an active participant ina an employer sponsored retirement plan), except that any conversion is disregarded in determining modified AGI."
Not e that the Code does not use the word "modified" whereas the Reg does.

If you can hang your hat on the "any" conversion, then you shouldn't have to count it. There may be something else that trumps this specific to the 4-year special conversion, but I couldn't find anything. My opinion is that you wouldn't have to count it.

Belgarath


You are right. Conversion amounts are not factored in the MAGI for determining eligibility to convert to a Roth IRA. If is did, those will $million IRA balances would not be able to convert.