Roth Conversion Prior to IRA Rollover
If a client with no TIRA accounts makes a TIRA contribution in January 2023 and then immediately converts it to a Roth IRA, will he have to consider assets rolled over to a TIRA later in the year from an old 401k plan when calculating the tax burden? I am not sure if the IRS looks at what TIRAs are in existence at the time of the conversion to calculate the tax on the conversion, or if they look at what TIRAs are in existence at the end of the year.
Thank you!
Permalink Submitted by Alan - IRA critic on Thu, 2022-12-08 16:06
The 12/31/2023 year end balance is used to compute the taxable amount of the conversion. The value of IRAs at the time of the conversion does not matter. Therefore, if this rollover proceeds the conversion will be mostly taxable, even if the regular contribution is not deducted.