For more information, see Do not subtract conversion income when figuring your other AGI-based phaseouts and taxable income, such as your deduction for medical and dental expenses.
For plan years beginning after 2002, a qualified employer plan (retirement plan) can maintain a separate account or annuity under the plan (a deemed IRA) to receive voluntary employee contributions.If the separate account or annuity otherwise meets the requirements of an IRA, it will be subject only to IRA rules.A contribution to one does not impact your eligibility to contribute to the other. 575, for more information on designated Roth accounts.A Roth IRA is an individual retirement plan that, except as explained in this chapter, is subject to the rules that apply to a traditional IRA (defined next). Individual retirement accounts and annuities are described in chapter 1 under To be a Roth IRA, the account or annuity must be designated as a Roth IRA when it is opened.Enter any income resulting from the conversion of an IRA (other than a Roth IRA) to a Roth IRA (included on Form 1040, line 15b, Form 1040A, line 11b, or Form 1040NR, line 16b) and a rollover from a qualified retirement plan to a Roth IRA (included on Form 1040, line 16b, Form 1040A, line 12b, or Form 1040NR, line 17b) If the amount on line 12 is more than the amount on line 13 and you have other income or loss items, such as social security income or passive activity losses, that are subject to AGI-based phaseouts, you can refigure your AGI solely for the purpose of figuring your modified AGI for Roth IRA purposes.
A deemed IRA can be a Roth IRA, but neither a SEP IRA nor a SIMPLE IRA can be designated as a Roth IRA.
Unlike a traditional IRA, you cannot deduct contributions to a Roth IRA.
But, if you satisfy the requirements, qualified distributions (discussed in chapter 2 of Pub. Contributions can be made to your Roth IRA after you reach age 70½ and you can leave amounts in your Roth IRA as long as you live. Compensation includes wages, salaries, tips, professional fees, bonuses, and other amounts received for providing personal services.
It also includes commissions, self-employment income, nontaxable combat pay, military differential pay, and taxable alimony and separate maintenance payments.
An employee's account can be treated as a traditional IRA or a Roth IRA. Designated Roth accounts are separate accounts under 401(k), 403(b), or 457(b) plans that accept elective deferrals that are referred to as Roth contributions.
These elective deferrals are included in your income, but qualified distributions from these accounts are not included in your income.