Deductible and non-deductible dollars in an IRA
Basis has been reported to the IRS on form 8606. Is there a way to convert the basis to Roth and move those dollars into a Roth IRA?
Basis has been reported to the IRS on form 8606. Is there a way to convert the basis to Roth and move those dollars into a Roth IRA?
Permalink Submitted by Alan - IRA critic on Fri, 2020-10-02 23:13
Not separately. The taxable amount of a conversion is calculated on Form 8606 and includes all owned IRA accounts of the taxpayer. The non taxable amount is the pro rate factor of the basis relative to the total year end values of all such IRA accounts. But there is a way to convert just the basis if the taxable portion of all IRAs is rolled into an accepting employer plan, leaving only the basis in the TIRA. The basis remaining can then be converted tax free. Very few employer plans will accept IRA rollovers unless employee is still active, and some plans that do limit rollovers to IRA rollover accounts that were funded only by rollovers from employer plans.