Eligibility Criterion for Normal IRA Conversion to Roth IRA
The eligibility criterion for normal IRA conversion to Roth IRA, as per the year 2010, is as follows:
- In case of married couple who have separate IRA before 2010, they cannot covert. This is possible for couple who have been living apart for the past year.
- If the IRA is for before 2010, the person is not eligible to contribute if the modified adjustable gross is above 100,000$.
- Unlike previously if is possible to change to Roth IRA from employer plan through rollover. This was not possible for before 2008.
- In case the original IRA had been passed on from a person other than the spouse, the transfer in not possible.
- If the original IRA has been a rollover, conversion to Roth is possible if the change is within 12months.
For couple who file separately conversion to Roth is not possible. The only exception is for those who have been apart for more than a year. But after 2010 this rule is no longer applicable. In case the modified adjustable income is above 100,000$ the change to Roth from original IRA is not permissible. But there are a few exceptions. This is applicable only if the MAGI cross the limit in the year of conversion. If after the conversion the MAGI increases there will not be any problem.
Unlike previously the rollover from other accounts to Roth IRA can be direct. Previously if you want to change from employer account, the first step was to rollover to normal IRA and conversion to Roth IRA. This can happen only if eligible for both the steps. Rollover is not possible in case of inherited IRAs. The only exception to this is if the IRA has belonged to your spouse. In such circumstances, it is considered yours and any thing can be done to it.
