Roth Conv- Is Beneficiary IRA acct aggregated?
1) After converting your IRA to a Roth IRA, can anyone confirm if when aggregating your IRAs (the value of all your traditional, SEP and SIMPLE IRAs as of December 31 for basis purposes) you do NOT include an inherited non-spouse Beneficiary IRA?
2) Additionally, if you own one traditional IRA account that contains non-deductible contributions and rollover funds from a previous employer’s 401k plan (so funds have been commingled), you could still roll a portion of that IRA account into your current employer’s 401k plan (assuming they accept IRA funds), thus leaving behind in the IRA your basis (non-deductible contributions) therefore improving your ratio for tax purposes if you convert the remainder of the IRA to a Roth. Can anyone confirm it is possible to do this from a single IRA account that contains commingled monies and accomplish those tax goals?
Thank you!
Permalink Submitted by Alan Spross on Wed, 2009-11-18 22:40
1) The total adjusted year end value on Form 8606 used to figure the tax on conversions does NOT include inherited IRAs. This is logical given that a non spouse inherited TIRA cannot be converted to a Roth IRA.
2) This is possible, but many qualified plans will NOT accept incoming rollovers from contributary IRA accounts. They are afraid of receiving after tax amounts that they are not legally allowed to receive, and could disqualify the plan or result in difficult corrective procedures. However, if a plan is willing to assume the risk of these rollovers, they are authorized to document the pre tax values in any way they wish. Chances are better for a plan to accept incoming rollovers from conduit IRA accounts, ie IRA accounts that have ONLY received pre tax employer plan rollovers, aka “Rollover IRA”.