inplan conversion to roth
suppose i have 100 000 in a state government 457 plan, cost basis 80 000. they allow inplan conversion to roth
i looked up irs rules for inplan conversion.
if i do inplan conversion, irs says i am taxed on “distribution minus cost basis”
is this how it works? i pay taxes on just 20 000?
sounds too good
what am i missing?
thanks
Permalink Submitted by Alan - IRA critic on Mon, 2020-03-23 23:30
How do your define “cost basis”? How was that 80,000 contributed? If you mean that the plan balance is 100,000 but you only contributed 80,000, the 80,000 is not “basis” and any IRR (in plan Roth rollover) will be 100% taxable.