lucasg85

You can contribute to both, but you can only deduct the traditional IRA, and you have to pay tax on anything that is rolled (you are essentially paying back the tax you deducted earlier when you initially contributed to the traditional).

Numi, if you are planning to make a lot in the future, then it makes sense to roll as much of your traditional to a Roth in a year when you are making little, because 1) you'll be in a lower tax bracket, and 2) you might not get to do it when you are raking in the bux. So if you aren't employed during your MBA, that's a good time to do it.

laurab

Max for the Roth is $5000 per year

jbaldyga

Related question to the tax experts:

Can you have both a Roth and a regular IRA and put the max in both ? I understand that the max for a Roth is 16500 this year and about 6000 for an IRA, can we have both deducted ?

Windjammer

There is a limitation to the amount you can contribute to a ROTH that phases out for high income. Sounds correct. You can roll it though.

neil1234

Can you roll a regular IRA into a Roth? Plus, I think Numi will be priced out of the Roth IRA pretty quickly. I believe it's under 150k for individuals.

therecruit

No real reason not to do it. Just remember that you will be on the hook for paying taxes on that as ordinary income in the year that you roll over.

mdfb79

Regular IRA - Untaxed money going in, removed money taxed at marginal rate

Roth IRA - Taxed money going in, removed money coming out tax-free

It doesn't have anything to do with how much money you're making right now. It should depend on if you think paying the taxes now (roll it into a ROTH) to remove your money later tax-free is worth it. If you plan on retiring in the next 5-8 years it may not be worth it. If you plan to pass it along to an inheritent tax free or work for a while longer then it may be worth it.

It's also going to come down to how much money your IRA may make. Because Roth gains are not taxed under the regular (because you already paid for them), but the regular IRA gains will. So if you think the market is going bull next few years do it. If you think you'll get minimal returns don't. Really you should consult a tax accountant and look at hard numbers. Without more information it's difficult for anyone to suggest.