Conversion from existing IRA to a Roth

Submitted by Robert Williams on Wed, 2015-03-25 18:35

I have an existing IRA with a discount broker. I also have a 401(k) and a government TSP. My Wife has a Sep IRA with a different broker.

For the past several years I have made non deductible contributions to My IRA. Can I roll these nondeductible contributions over to a Roth with the same broker without penalty?

Can I roll over the entire IRA over to a Roth with the same broker without penalty?

If either of the above what steps do I take to effect the rollover?

If not, what can I do to establish a Roth. I am 68 years old.



Submitted by Alan - IRA critic on Wed, 2015-03-25 18:44

  • You should have filed Form 8606 reporting all your non deductible contributions to an IRA. Your total IRA basis will be shown on your latest 8606 line 14. If you convert or all part of the IRA, the non taxable amount is determined by a pro rating of your basis to the total adjusted IRA value at year end. You cannot just convert the basis by itself.
  • However, there is a solution that will allow a tax free conversion to occur. If you are currently working, and if your 401k plan will accept IRA rollovers, you can roll the pre tax amount of your IRA (total value less your basis) into the employer plan leaving only the basis behind in the IRA. You can then convert the basis tax free. You could also check with the TSP to see if they will accept your IRA rollover since the TSP might accept it even if you are retired from the govt job.
  • If you did not file the 8606 forms, you need to reconstruct them starting with the first year you made a non deductible contribution. That could be a very difficult research project.

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