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Roth IRA conversion - can I do it

Posted: Mon Mar 12, 2018 12:34 pm
by bobd1996
Hello. My 2017 income was near the threshold to qualify for the savers credit. By contributing to a traditional IRA I was able to lower my AGI to get a $800 savers credit.
Will I still be able to convert this IRA next year to a Roth IRA (and pay the income tax of course) even though it reduced my AGI and resulted in qualifying for the savers credit? Will the savers credit have to be re-paid?
Thanks.

Re: Roth IRA conversion - can I do it

Posted: Mon Mar 12, 2018 2:58 pm
by retiredjg
I don't know of any reason you can't convert it to Roth IRA now unless you are hoping to get the saver's credit again on your 2018 taxes. Can't see any reason you'd have to repay it. You reported your taxes correctly for 2017. You get to do what you want with your money in 2018.

Re: Roth IRA conversion - can I do it

Posted: Tue Mar 13, 2018 11:23 am
by MtnBiker
retiredjg wrote:
Mon Mar 12, 2018 2:58 pm
I don't know of any reason you can't convert it to Roth IRA now unless you are hoping to get the saver's credit again on your 2018 taxes.
Just to be perfectly clear, Roth conversions have no effect on ability to take the saver's credit (other than the affect of increased AGI if the conversion is taxable). Money saved in a TIRA or money saved in a Roth is still money saved.

If you take a distribution from a TIRA or Roth that reduces the net amount saved in tax privileged accounts, it will impact the saver's credit. See instructions for Line 4 on Form 8880.

Re: Roth IRA conversion - can I do it

Posted: Tue Mar 13, 2018 4:06 pm
by retiredjg
Yes, if it was unclear that is what I meant. If you use tIRA instead of Roth IRA, your income is lower and that may be what makes you eligible for the saver's credit. Or to get a higher percentage on your saver's credit.