IRA basis and non-basis money converted to ROTH
I have one IRA, of several, that contains nondeductible contribution about 20% of the total in this IRA.
I want to convert about half to a new ROTH. All accounts are in one company so it would a direct conversion.
The other IRA’s are values are in total 5 times the size of this IRA. I believe the percentage that would be tax-free would be
about 4% (20/5.) Therefore is the tax-free conversion a small amount (around 4%) and the rest is taxable at my tax rate?
The taxes would paid from an outside source, not the IRA.
Permalink Submitted by Alan - IRA critic on Wed, 2020-12-23 20:37
Yes, Form 8606 will be used to report the conversion and calculate the non taxable amount. I figure about 3.3% would be non taxable based on your value estimates. You should have filed a Form 8606 for each year you made a non deductible contribution in the past to document your IRA basis.