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Subject:  Re: Social Security Taxes on Conversion to Roth Date:  12/4/1998  8:08 PM
Author:  TMFTaxes Number:  6764 of 127549


Hi there, Chuck...

[[ I'm just trying to calculate all the ramifications of my converting a traditional IRA to a

It CAN get to be a bit of a pain, eh??

[[ I understand that I will have to include the converted amount as income on my tax return.]]

That's correct. But remember that you can either spread the income out over a 4-year period, or take the income all in one year for a conversion made before 12-31-98. The option is completely yours.

[[ What I need to know is if the conversion income is used to calculate FICA. Since I am self
employed, I pay the whole tamale and I'm not sure if FICA was paid on the original investment in
previous years.]]

Nope...the conversion income will NOT be subject to FICA or SE taxes. It is treated as "pension" income, not subject to FICA taxes whatsoever.

But please remember that if you are receiving Social Security benefits, this additional income WILL push your adjusted AGI higher, and make more of your SS benefits taxable.

[[ Thanks for your help]]

I hope I did...

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