Ask an Advisor: We Earn More Than $350K and Can't Contribute to a Roth IRA. Can We Still Do Roth Conversions?
If you and your spouse earn over $350,000 annually, you're unable to contribute to a Roth IRA due to income limits. However, there's no restriction on converting tax-deferred retirement accounts like 401(k)s into Roth IRAs. The Roth IRA income limit doesn't apply to workplace retirement plans, so if your employer offers Roth contributions, you can still contribute up to the annual limit regardless of income.
Financial advisors can help determine if a Roth conversion is beneficial based on your expected future tax rate and retirement plans. Conversions are tax-deductible, but they increase your taxable income for the year. It's crucial to consider your current tax rate and the projected future rate when deciding when to convert.
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