MAGI for married couple

[Guest jsp123]

I lost my job last year and rolled my 403(B) funds into a Roth. I have since found a new job and our MAGI exceeds $100k. Do I have to do a recharacterzation to a traditional IRA and wait until they increase the MAGI to qualify? How do I handle the gains? And is the $2000 contribution I made to the Roth deductable?

[John G]

If you switched to a Roth in 1998, then the income threshold is your MAGI for 1998. Your MAGI for 1999 has no impact on the Roth conversion you did last year, even if you elect the four year average. If your 98 income is beyond $100K, and your Roth conversion was also in 98, then you do have a problem that must be corrected before you file your tax return. One solution, recharacterize now and then try and shift/defer compensation or bonuses out of the year you want to convert.

Please note that the income threshold for annual contributions is considerably higher than the $100K max level allowed for Roth conversions.