The Motley Fool Discussion Boards

Previous Page

Investing/Strategies / Retirement Investing


Subject:  Re: Quick Question Date:  12/2/2004  12:55 AM
Author:  Mark0Young Number:  43380 of 78167

I have a sneaky suspicion that there is more to this than just the conversion issue.

Even though you might think of converting a Traditional IRA funded with non-deductible contributions, when you figure out taxes on the amount converted, the part of the conversion that isn't taxable is pro-rated to the total non-deductible contributions to all your Traditional IRAs divided by the total of all Traditional IRA balances; you cannot pick and chose your tax impact by picking just the specific Traditional IRA to convert.

If this Traditional IRA (the one with the "capital losses") is the only Traditional IRA you have, it is possible to realize the losses for tax purposes by withdrawing all your money from that Traditional IRA and closing it and, if the total amount withdrawn is less than all non-deductible contributions to it, the shortfall can be claimed as an "investment expense" on Schedule A in the section subject to 2% AGI exclusion (which for modest losses is likely to be a big hurdle).

I don't know if ther