Reviewed and updated October 16, 2026
Rules and decisions to review
- Direct contribution eligibility depends on filing status, modified adjusted gross income and eligible compensation.
- Traditional and Roth IRA contributions share a combined annual limit. Deposits across several institutions do not create separate limits.
- A conversion from pretax retirement funds generally creates taxable income to the extent the converted amount has not already been taxed.
- Qualified distribution rules include an applicable five-year period and an additional qualifying condition. Separate ordering and conversion rules can affect earlier withdrawals.
A practical example
Moving pretax IRA money into a Roth IRA is a conversion rather than a regular contribution. It can increase taxable income even though no money is kept for everyday spending.
Records to gather
Gather contribution dates, conversion confirmations, Forms 1099-R and 5498, prior Forms 8606 and the first Roth contribution year.
Your next step
Confirm direct-contribution eligibility before depositing funds. If considering a conversion, estimate the current tax and review existing traditional IRA basis and five-year rules before authorizing the transaction.
Official sources
This guide provides general information. The rules depend on the tax year, jurisdiction and your circumstances. Ask our team which filing or planning steps apply to you.
