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Old 01-21-2009, 12:01 PM
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Join Date: Jan 2009
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401k/Non-deductible IRA Question, please

Hi all:

I am not a tax pro so help is appreciated. My spouse and I have combined inc. >166k. We each maximize 401k contributions at 15,500 (both under 50).

We each have some rollover IRA $ existing. (app. 30-40k each).

I am trying to determine where to invest additional income. Reading about the 2010 provision that removes upper income limit on Roth conversions, I think we should each contribute 5k/yr. in 08 and 09 to new, nondeductible IRAs and then convert them to roth's in 2010.

I do realize that iras are aggregated and that tax would be calculated as the percentage that is pre/total.

My questions:

1. Is this allowable? (401k AND nondeductible IRA or is the 15,500 limit THE LIMIT)

2. Could I take all pre-tax IRA and roll them into our current 401 qualified plan, thus eliminating majority of taxes when I do the roth conversion? (our plan does allow this)

3. Is this all worthwhile or are there simpler, tax efficient approaches?

I very much appreciate the feedback from one and all.

Thanks,
Joe



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