Converting a 2010 Non-deductible contribution
When convering a 2010 non-deductible IRA contribution immediately to a Roth IRA, is there a chance that I can be taxed if there is gain on that contribution in 2010? The fact that the year end value is used to compute the basis, would suggest that the year end value that will be used is the 12/31/2010 value and that is yet to be determined.
Permalink Submitted by Alan Spross on Thu, 2010-02-18 20:40
If this is the only TIRA account, there will be no 2010 year end value since the funds will be in a Roth IRA.
Note that a tax free conversion assumes that there are no other TIRA assets other than the non deductible contribution. If that is converted right away before any earnings accrue in the account AND if no other TIRA rollovers or contributions are made prior to year end, it will be tax free. But if there are any other TIRA funds in existence in 2010, then the pro rate rules apply to conversions and they will be taxable to a considerable extent.