Convert IRA to Roth?
Hi,
I have $5,900 in an IRA. I funded it in 2010 and 2011. I earned too much to take a deduction, so I filed form 8606 for both years. (long story, I meant to create a Roth, but funded a traditional IRA mistake. I never took a tax deduction, so I had to amend my tax returns to file form 8606.)
For 2012, I have already funded my Roth IRA (my income is about 80K). Can I convert my IRA and roll it into my Roth IRA? My IRA has lost about $300, so I have no gains.
Can convert my my IRA to a Roth, if so can anyone point me into the right direction?
thanks much
Permalink Submitted by Alan Spross on Mon, 2012-07-30 03:57
Your 2011 8606 shows your cumulative basis from non deductible contributions for all your TIRA accounts. When you convert your TIRA balance, the conversion is tax free up to the amount of your basis showing on the 8606.
Since you will apparently have around $300 of unused basis after converting and all your TIRAs have been converted, you can qualify for a misc itemized deduction of $300 for the loss, however this deduction along with certain other misc deductions is subject to a 2% of AGI limit. The deduction can only be taken in the year you totally distributed your entire TIRA balance.