ROTH CONVERSION
I have a client who has a pre-tax IRA (with $107K) and a Roth conversion account (balance is $180K) already. She would like to convert the remaining traditional IRA to the Roth over the next two or three years, so that at the end, the entire amount would’ve been moved to the Roth. What will the tax implications be since she will be converting in the years that she will still have the pre-tax IRA? Ultimately, the $107K will be completely converted over the next few years…..
Permalink Submitted by Alan - IRA critic on Tue, 2018-06-26 03:32
If her IRA has no basis from non deductible contributions, the amount she converts each year will be taxable in that year. So around 36k would be taxable if she converted about 1/3 of the original balance each year. If she had any basis in the IRA, the amount she converts each year would include a portion that was not taxable.