IRA Roth Conversion
Given the following fact pattern, how much of the IRA is taxable?
12/31/2010 IRA value = $15,000 basis = $0
100% of IRA is transferred to the owners 401(k) plan on 1/15/2011
$6,000 non- deductible IRA contribution is made on 2/15/2011 (owner over age 50)
3/15/2011 $6,000 IRA is converted to Roth IRA (assume no appreciation since made on 2/15/2011)
Permalink Submitted by Alan Spross on Wed, 2011-02-23 23:26
No part of the conversion would be taxable. The transfer to the 401k plan would not show at all on the Form 8606. All that would show is a 6k non deductible contribution and a 6k conversion of that basis.
The transfer of the pre tax IRA amount to the 401k could be done much later in the year as well and the TIRA basis converted. As long as the pre tax amount is out of the IRA on 12/31 and would not be rolled back to the IRA within 60 days, the tax free conversion could be executed.