Roth Conversion Valuation
Hello,
If an individual performs a Roth IRA conversion in 2014, is the value picked up for income tax purposes in 2015 equal to the (a) converted amount or (b) fair market value of the account as of 12/31/14? I believe it’s the latter but wanted to confirm this. Thanks.
Permalink Submitted by Alan - IRA critic on Thu, 2014-06-05 16:13
The taxable income for a 2014 conversion as reported on the 2014 1099R is the value of the assets when distributed from the TIRA, ie at the time of the conversion. Changes in value in the Roth IRA after conversion will be tax free if the Roth is fully qualified at the time of distribution. If the value of the conversion drops, the conversion can be recharacterized up to the extended due for the tax return for the conversion year.