What is included in the modified AGI for Roth Conversions?

[Guest frustrated]

I have been getting conflicting information from the IRS on just what is included in the modified adjusted gross income to determine the dollar amt. for the limitation of the conversion of the roth ira.

I retired and I took a lump-sum distribution from my 401K and am using the 5 or 10 year option to pay the taxes. The distribution is reported on part 3 of form 4972 and is not reported on the 1040 form and is not shown in line 33 on the 1040 form (adjusted gross income). Do you know of any case

where it is added to the modified agi for the purpose of determining the

eligibility for a roth ira conversion?

Thanks for your help!!

[Guest J Singletary]

I was scanning some of the older topics and came across your question. I'm surprised no one responded earlier, and I hope this information is not too late for you to use.

To answer your question on the modified adjusted gross income for Roth conversions, that can be found in the current edition of IRS Publication 590 on page 37. You can find this on the IRS web site at www.irs.ustreas.gov, under "Publications".

You should take note that you cannot convert directly from a 401K plan to a Roth IRA. You would have had to first roll to a Traditional IRA, then convert to a Roth. The best way to get to a Traditional IRA from a 401K is typically via a Direct Rollover. You indicated that you took a lump sum distribution from the 401K. This would have to be rolled over within 60 days to the Traditional IRA, which would negate the necessity of using the 5 or 10 year averaging you mentioned.

Again, I hope this information is not too late to be of help to you.