Non-Deductible IRA contribution, conversion & rollover
I have a client whose income prevents him from contributing to his Roth IRA for 2013. He would like to make a $6,000 2013 non-deductible TIRA contribution, then convert it to his Roth. He is also rolling $600,000 out of his previous employer’s 401(k) plan into his TIRA plan this month. Will this impact the taxation of the $6,000 non-deductible Roth conversion?
Permalink Submitted by mk foss on Thu, 2013-08-01 17:02
The rollover will have a definite impact on the Roth conversion. You determine how much of the rollover is taxable by looking at year-end balances of all IRAs. The $6,000 contribution that is rolled over will be almost fully taxable. See Form 8606 for the calculation method.