Questions about IRAs

Yes, and the amount he puts into the traditional IRA is deductible in full since his AGI is less than 56k.

Just to be clear, for 2012, if his AGI is between 58k and 68k and he is covered by a retirement plan at work, the amount he of traditional IRA he can deduct is phased out, and over 68k nothing can be deducted. He can still contribute 5000 to the traditional IRA, assuming his salary is 5k or more, but just can't take a deduction for all or part it. Form 8606 will be required.

It might be better for him to contribute the 5k through work because they might match his contributions in part. Ie, increase your 401k contributions at work.

Withdraw it without penalty before 4/15/2013 or 10/15/2013 if you filed an extension. But on the earnings he must pay federal tax, 10% penalty, state tax. Or you can recharacterize the entire Roth as a traditional IRA by

Yes, he can do rollover it now. BTW, if his 401k is a Roth 401k then he must rollover to a Roth IRA, and if a traditional 401k then rollover to a traditional IRA.

Conversion (for 2011) had to be done by 12/31/11. Any conversion done now is a 2012 conversion.

Until last month he worked someplace that had a 401K, and hopes to again; but at the moment he is doing temp work with no benefits.

I am thinking a Roth IRA makes more sense because a $5000 Trad contribution only gets him a $700 tax reduction. Seems to me the benefits of a Roth are higher.

I "think" his 401K is traditional. Can he convert it to Traditional IRA and then roll it over into an existing Roth IRA, paying tax on the funds?

Thanks for your help.

at the moment he is doing temp work with no benefits.

only gets him a $700 tax reduction. Seems to me the benefits of a Roth are higher.

then roll it over into an existing Roth IRA, paying tax on the funds?

In general, the idea of using Roth to 'fill' the 15% bracket and then pre tax above that, will work for a great majority of the people. For young folk like your son, who is likely to earn his way into the 25% bracket this is the time to go Roth. He can convert the 401(k) right to Roth, but I recommend stopping in the traditional IRA in between. It allows for a recharacterization if his taxable income goes too high this year.

Can he both convert the 401K AND put $5,000 into an IRA this year? I don't see why not, but you never know.

see why not, but you never know.

I was not addressing new deposits, just suggesting that a conversion from 401(k) directly to Roth is not always the best thing.

Yes, he can still make a deposit this year, conversions don't impact deposit.