IRA accounts considered when converting to a Roth
I have a few inherited IRA accounts, a previously non deductible traditional IRA, a Roth IRA and a SEP account. If I want to converted by traditional IRA to a Roth, do I include the value of the inherited IRA’s for purposes of calculating the percentage of basis that reduces the taxability of the converted amount?
Permalink Submitted by Alan - IRA critic on Thu, 2018-10-11 23:10
The only accounts that are included in conversion basis % are owned NON ROTH IRAs. Inherited IRAs are not included, but the SEP IRA is. It is possible that an inherited IRA does have basis, but it is kept separate from owned IRA basis (separate Form 8606 for each inherited IRA inherited from same decedent), and since an inherited IRA cannot be converted, that basis would only be used in determining the taxable amount of distributions including RMDs.
Permalink Submitted by Marion Katz on Thu, 2018-10-11 23:40
Thanks. That confirms my understanding.