Question regarding spousal IRAs

[sjinhan]

I cannot find out answer to this question so I am not even sure if this is possible.

Any thoughts would be appreciated.

I am setting up a Roth IRA for my wife who is just a stay home mom.

I am trying to see if I can convert the money in my IRA to my wife's IRA?

If you are wondering if why I am attempting to do this is because I want to have to ability to do backdoor Roth IRA in the future and I believe I will be penalized if I have traditional IRAs when I convert the money from non-deductible IRA to Roth IRA.

Hrm anyone have any opinions on this? Maybe I am lost on this topic altogether.

[The Evil Genius]

I think it can only be done if the court orders a split in an IRA (per a divorce finding)..but I'm not positive on it.

Hopefully the experts will way in.

[HaveFaith]

A couple links for you

http://www.rothira.com/blog/open-an-...working-spouse

http://www.fool.com/money/allaboutir...boutiras03.htm

My (limited) understanding boils down to this
Traditional IRA = not taxed now, but taxed when you take it out
Roth IRA = taxed now, but not taxed when you take it out.

Bottom line to decide between them is to determine when you think you will be in the highest tax bracket. If you have planned well and should have a large amount saved for retirement to the point where the required (or desired) distributions will put you up a tax bracket then the Roth is for you. If you are a high earner now, but late to the retirement savings party - (in other words you won't be a retirement millionaire) then you are probably better off with the traditional IRA.

Non-working (love that word don't you) spouses are eligible for contributuions

(As an aside - if you are doing IRA instead of 401(k) - can you do 401(k) for the higher limits and the possible company match?)

[sjinhan]

Well I am only 31 now and at least for few years I will be making too much to qualify for Roth. I am trying to diversify against any future changes in the tax rates. I am expecting to be in the high tax rate when I retire. So I have been reading up on back door Roth IRAs and it looks like the trick is that I need to have no traditional IRAs. I got 40k of it that I need to recharacterize. I am starting to think I am getting confused here.

Maybe I just stop with the 401k and keep the rest in normal investments.

I said non working just to indicate that she is no income to report.

---------- Post added January-28th-2013 at 06:38 PM ----------

Oh I am already doing 12% for 401k and company is throwing in 8% so I think I am good at pre-tax deferred investments.

[techboy]

I'm not familiar enough with the topic to give you guidance, but I'd suggest going to bogleheads and asking there. It's a very friendly, very knowledgeable community, and they will either know the answer or know how to find it. Many of the posters there are finance professionals and academics (one's a professor of economics at Duke, for instance), and they give of their time for free to help people out. It's the best investing oriented board I've ever come across.

[sjinhan]

Techboy thanks for that.

I will check that board out tonight.

[The Sir]

At age 31, your best bet would be to max out the portion of your 401K contribution that the company will match. And then put the rest of the money you want to save (up to $5,000 I believe, but that may have just been upped a tad for 2013).

As for the transferability and the backdooring with the wife (lol), I'm not 100% on the rules there.