SEP IRA

Posts Tagged ‘rules’

Question: Can I convert my SEP IRA to a Roth IRA?

I contributed the $5000 maximum to my Roth IRA last year (2008). I also contributed an additional $2250 to a SEP IRA the same year. Can I convert the SEP to a Roth under the new 2010 rule? So, in effect I would have $7250 total in the Roth for that year. If so, can I do it now in 2009 or do I have to wait until Jan 1. 2010?

Answer: According to IRS publication 590, you can roll a SEP IRA to a ROTH, paying the taxes, but no penalty. The rollover doesn’t count as a Contribution, so the fact that you also contributed $5000 doesn’t matter.

I believe the issue is the amount of your income. For 2009, it has to be less than $100K. For 2010, there isn’t an income limit. You cannot use the 2010 rules until 1/1/2010.

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