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Subject:  Re: Taxes on Roth Conversion Date:  12/16/1998  2:15 PM
Author:  bliles Number:  7262 of 127753

smdesai said:

I have two IRAs; one has all nondeductible contributions, value (9K) of which is right now lower
than the amount contributed (12K) and other has my 401K money (165K) rolled over from
previous job. My question is : When I convert nondeductible IRA to Roth will I have to pay any
taxes ? If so, can you suggest some reading material which shows how to go about calculating
those taxes. What effect the amount in rollover IRA will have on taxes ?

Uncle Clinton considers all of your IRA's as one. To him, you have an IRA with $174k with a basis of $12k. That gives you a basis (nondeductible contributions) of 6.8966%. However much you convert to a ROTH, from whichever IRA, you will be taxed on 93.1034% of the conversion, and 6.8966% of the conversion will be deemed already taxed. It doesn't matter which IRA you convert.

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