11 May Is there an income limit to doing a Roth conversion?
Q. Required Minimum Distributions (RMDs) are suspended for 2020. I understand you can convert any part of a traditional IRA to a Roth. Is this limited for higher income taxpayers? I would like to convert part of my traditional IRA in 2020. I am 76 and plan to contribute to my Solo 401(k). Can I do a partial conversion?
A. Many people are interested in converting a traditional IRA to a Roth IRA after the recent stock market decline.
And you’re correct. The Coronavirus Aid, Relief, and Economic Security (CARES) Act — the stimulus bill — suspended the requirement to take RMDs in 2020, said Neil Becourtney, a certified public accountant and tax partner with CohnReznick in Holmdel.
He said there have been no recent changes to the Roth IRA conversion rules.
Prior to 2010, there was a $100,000 adjusted gross income limitation for converting traditional IRAs to Roth IRAs, Becourtney said.
“That income threshold was eliminated for IRA conversions made after 2009,” he said.
Also, you do not have to convert all traditional IRA balances in your portfolio.
“A partial conversion is permissible,” he said. “The conversion will result in taxable income to you based on the fair market value on the conversion date of the IRAs converted.”
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This story was originally published on May 11, 2020.
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