DW and I have not been eligible to make deductible contributions to an IRA or contributions to a roth-IRA in many years due to high income restrictions. Lately, I have been thinking about taking advantage of the backdoor roth IRA option. We have no tax-free investment accounts at this point and it seems like it would be a good thing to have on order to manage taxable income down the road.
DW has a large, deductible traditional IRA (401K rollover from a previous job), so it would not be worth it for her to do a conversion as this point. I, on the other hand, have only one tiny, deductible traditional IRA. Even though we are in a high tax bracket, I am thinking about converting that traditional IRA to a roth IRA and take the tax hit. Then I would be able to make non-deductible contributions to the traditional IRA every year and transfer them immediately to the roth.
Questions:
Does the $5,500 limit on IRA contributions apply to non-deductible contributions?
Is there a limit on the dollar amount one can convert from IRA to roth IRA every year?
DW has a large, deductible traditional IRA (401K rollover from a previous job), so it would not be worth it for her to do a conversion as this point. I, on the other hand, have only one tiny, deductible traditional IRA. Even though we are in a high tax bracket, I am thinking about converting that traditional IRA to a roth IRA and take the tax hit. Then I would be able to make non-deductible contributions to the traditional IRA every year and transfer them immediately to the roth.
Questions:
Does the $5,500 limit on IRA contributions apply to non-deductible contributions?
Is there a limit on the dollar amount one can convert from IRA to roth IRA every year?