I have a Roth IRA that I've already established and will be contributing the max amount allowed. I would like for my wife to do the same. However, earlier in the year she made contributions to a tradtional IRA (through an automated account she had already established, but has since been stopped). Let's say she contributed $500. Do I have to "convert" that into a Roth and pay taxes on it, or can I simply contribute $3500 into a Roth and leave the $500 in the regular IRA?
2007-12-12 02:33:00 · 3 answers · asked by kylometers 1 in Business & Finance ➔ Taxes ➔ United States
You can leave the $500 in the traditional IRA and contribute $3500 to a Roth IRA. Just as long as your total contributions do not exceed $4000 for 2007 (or $5000 for 2008), you'll be fine.
You could also convert her traditional IRA to a Roth IRA, but you are correct that she would have to pay taxes on the $500.
It just depends on what you want to do.
2007-12-12 02:56:07 · answer #1 · answered by Stacia Z 3 · 1⤊ 0⤋
You can leave the $500 in the traditional and contribute $3500 to the Roth.
If there is a small amount in the traditional, it may be good idea to convert to a Roth in the long run.
2007-12-12 02:53:46 · answer #2 · answered by Wayne Z 7 · 3⤊ 3⤋
You can contribute to both in the same year with no problem.
2007-12-12 03:02:56 · answer #3 · answered by Judy 7 · 1⤊ 0⤋