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SEP & Roth

Guest Michael Scott

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Guest Michael Scott

Taxpayer has a SEP IRA. Can he convert it into a Roth, taking advantage of the no AGI limitation rules? Also, if he does this, can contributions continue into his SEP IRA going forward? And then, each year, convert it to Roth?

Based on everything I see, it appears so - just looking for confirmation from the wise ones on this board.

Thanks in advance.

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The answer to all your questions is, Yes. The following appears on p. 2 of IRS Pub 560:

Roth IRAs and rollovers.
Beginning in 2010, regardless of your income or filing status, you can roll over to a Roth IRA your traditional IRA, SEP-IRA, SIMPLE IRA or an eligible distribution from your employer-sponsored plan. Also, a special 2-year option will apply for rollovers to Roth IRAs in 2010 only. You have the option of reporting the taxable portion of your rollover in your gross income for 2010, or reporting half in 2011 and half in 2012. For additional information on rollovers, see Publication 590, Individual Retirement Arrangements (IRAs)."

Note that if you do not elect otherwise, a conversion to a Roth IRA in 2010 will, be deafult, be treated as taxable in 2011 (half) and 2012 (half).

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