Roth conversion question
If I have a SEP and a non-deductible traditional IRA, do I have to include my SEP in the calculation to determine the taxable amount if I convert my non-deductible traditional IRA to a Roth IRA? The non-deductible traditional IRA is the only traditional IRA I own.
Permalink Submitted by Alan Spross on Sun, 2010-03-21 22:15
You must include the values of all your owned IRA accounts including traditional, SEP and SIMPLE IRAs. Form 8606, which you use to document your basis with the IRS, clearly shows this on line 6. It also does not matter whether you convert the TIRA or the SEP since the total math treats them as one account rather than separate accounts.
Be sure that you have filed an 8606 for each year you made a non deductible TIRA contribution. If you did not file them, you can do it retroactively and the IRS has not been charging the $50 fine for this. A pro rated portion of your conversions would then be tax free.