[quote=ctr70]I will have to look into that. So if you put money into a “non-deductible” IRA you can immediately convert it to a Roth? So you have to convert every year you make a contribution? What is the cost to convert it? I have a SEP IRA too as I run a small business.
I still think it is so bogus that they don’t take the income cap off the Roth. What a joke. $122k is peanuts in Cali.[/quote]
Yes, you would have to do it periodically (e.g. every year if you wanted to minimize tax impacts).
If you had zero funds in other IRAs, then the cost is whatever your brokerage charges for opening (usually $0) and closing (~ $25 to $75). Taxes are based on the gains between when you opened the IRA and converted it to a Roth (essentially zero).
HOWEVER (and this is what prevents me from taking advantage of this): If you already have substantial funds in existing IRAs it is less attractive, due to the fine print:
The tax on the conversion to a Roth (if any) is determined by what would be taxable when accounting for all of your IRAs. Don;t know if a SEP counts (probably does). Consult a tax advisor.
