Beneficial IRA’s considered in Roth conversions
I have a small traditional IRA and 2 substantial beneficial IRA’s. Are the beneficial IRA’s a consideration if I want to convert the traditional IRA to a Roth IRA?
I have a small traditional IRA and 2 substantial beneficial IRA’s. Are the beneficial IRA’s a consideration if I want to convert the traditional IRA to a Roth IRA?
Permalink Submitted by Alan - IRA critic on Sat, 2016-08-20 00:46
Since you cannot convert the beneficiary IRAs, but you must take RMDs from them, they are increasing your marginal rate paid for converting from the owned IRA. That means there is a lesser chance that you are converting at a marginal rate that is lower then or equal to your expected rate in retirement. With respect to basis, if you have basis in either your inherited IRAs or owned IRAs, this basis is not combined with the other type of IRA. When you convert any of your owned IRA, the basis and account values of your inherited IRAs are not included in the calculation done with Form 8606.