IRA Rules

Question: Question about preexisting Roth IRA?

I stopped investing in my Roth IRAs about a year ago when my income put me outside of the income eligibility limits (>177K). Married, filing jointly. My understanding with the new rules that one could open a separate traditional IRA and then automatically place those funds into the preexisting Roth accounts. Does this make sense?
My understanding is that those with traditional IRAs who make more than 100K may now rollover those funds to a Roth, whereas before they could not. I understand that monies invested in Roths are taxed upfront. My question is, now that I can no longer contribute to my Roth, can I simply open up a traditional IRA with $5000 and then simply reinvest it into my existing Roth account?

Answer: I believe the strategy that you are referring to is to open a non-deductible IRA (since your income is too high for it to be deductible). You make your $5,000 contribution and then you are eligible to convert this into a Roth IRA. The term you are looking for is convert which you are now eligible to do because they lifted the income limits.

Please let me know if you have any questions.

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New Rules, New Options for IRAs

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