Roth IRA Conversion with co-mingled post-tax assets
Hello,
I liked to confirm how to do a Roth Conversion with commingled non-deductible contributions, while avoiding any pro-rata triggers.
We have approximately $766K in our IRA’s at Vanguard (me and my wife). Of this amount, $38K was contributed post-tax (non deductible and we do have this on our 8606 form).
As my wife has an S-Corp, we have an Individual 401K at Schwab (me and my wife)
Should I transfer only the pre-tax dollars to Schwab and leave a remaining $38K balance in Vanguard (non-deductible IRA contributions).
I would then be able to convert the $38K into a Roth IRA with no tax penalty as this is after-tax dollars.
Please help as I am getting mixed answers if this is possible and/or if this is the right way to do it.
Many thanks!
Permalink Submitted by Alan - IRA critic on Fri, 2018-02-23 19:22
I assume that you mean that the 38k was reported on the respective 8606 form for each spouse in accord with the amount of non deductible contributions made by each spouse. These forms are individual. The pre tax balance (total value less the Form 8606 basis) should be rolled into each solo K account assuming that the plan documents include acceptance of IRA rollovers. That will leave behind only the non deductible contribution basis in each spouse’s IRA which can then be converted to a Roth IRA tax free. I assume you get a W-2 from the S Corp.