Roth conversion followed by a non-deductible IRA contributio
If a person converts their IRA to a Roth and then makes a non-deductible IRA contribution shortly thereafter but in the same tax year, will that non-deductible IRA contribution get included as part of the Roth conversion and be treated as the cream in the coffee rule, or are they viewed as two separate transactions since at the time of the non-deductible contribution there is no longer an IRA?
Permalink Submitted by mk foss on Wed, 2010-08-11 18:39
The non-deductible IRA contribution will add basis for the “cream in the coffee” calculation on Form 8606. It’s actually a pretty good idea.
Matters would be worse for the taxation of the Roth conversion if there was a deductible contribution, a rollover from another plan or a SEP or SIMPLE contribution before 12/31/10.