When calculating MAGI for Roth IRA purposes, AGI is reduced by Roth conversions. Is it also reduced by in-plan Roth rollovers (Code G)?

Forum|Forum|3 years ago
March 18, 2023
1 reply
22 views

My client made a Roth IRA contribution, and it looks like it's an excess contribution. Her spouse did an in-plan Roth rollover. If he had done rollover to his Roth IRA, it would have reduced AGI and her Roth contribution would be allowed. Since he did the in-plan Roth rollover, it is pushing their income above the upper limit. Is this correct?

ProSeries Professional

This topic has been closed for replies.

Accountant-Man

Level 13

A ROTH conversion creates taxable income, but it adjusted out for ROTH allowance(so you say, and I believe you).

A ROTH rollover doesn't create taxable income, so why does it create ANY income?

** I'm still a champion... of the world! Even without The Lounge.

L

LizWAuthor

Level 2

An "In Plan Roth Rollover" from Traditional to Roth is taxable and reported with code G.

qbteachmt

Level 15

"Rollover" for type to type, is not taxable and not reportable. Example: 401(k) to Trad IRA, or Roth 401(k) to Roth IRA.

Anything that changes the nature of the funds is a taxable conversion. 401(k) to Roth IRA or Roth 401(k), for instance. Trad to Roth is a taxable conversion.

Rollovers (like to like) that miss the deadline are failed rollovers, and would be taxable for sheltered account types.

And once someone creates more taxable income, that would affect all other eligibility such as Roth contributions, credits that are AGI or MAGI limited.

Don't yell at us; we're volunteers

Sign up

Login with SSO

Let's get you signed in

Login with SSO