Roth conversion confusion

[John G]

IRS is wrong, Dan is right.

The suggestion to do it in stages to avoid tax bracket creep is a good one. But first you need to think through the reasons for a conversion very carefully. If she is unlikely to tap these funds and they would pass to an heir with a much higher tax bracket, then a conversion might be smart. If she is going to use up these funds, then it probably makes no sense as it appears that your mom is likely to always be in a low bracket. You need to consider the impact on estate plans as well. Check that the beneficiary designation is current.

[Guest rikib]

I am inquiring for my mom, who is 71 1/2

and who would like to convert a traditional

IRA (approx 90,000 in value) to a Roth. Her

AGI will be approx 11,000 for this yar.

She called the IRS and was told she did NOT qualify for a conversion because she has no

earned income (all of her AGI is from interest, etc). I believe this is INCORRECT.

Could you confirm that she does qualify? THX

[Guest Dan Anderegg]

I agree with you, the IRS is incorrect. An individual does not need earned income to covert a Traditional IRA to a Roth IRA as long as their AGI is under $100,000 and they are not married filing separate.

Remember Required Minimum Distributions can not be converted to a Roth. I might recomend that you spread the conversion process over a number of years to keep Mom in the 15% income bracket.

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Daniel Anderegg, CLU,ChFC