nondeductible IRA to Roth- tax consequences

Submitted by Shahpar Naghshineh on Tue, 2010-01-26 20:23

Hello,

I have a fewquestions. There is an individual who has a non deductible IRA and wants to convert that to Roth IRA. A- Can they do that since compensation is not an issue in 2010 ? B- what are the tax consequences C- Do they need to fill out any forms to report to the IRS?

I know they should consult a tax advisor.



Submitted by Marvin Rotenberg on Tue, 2010-01-26 21:47

Yes they can convert a non-deductible traditional IRA to a Roth IRA in 2010 regardless of income. Keep in mind however, they will have to satisfy the pro-rata rule. Which means they must consider all their IRAs they own. They cannot just cherry pick just the non-deductable IRA that has no basis.
Marvin



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