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Subject:  Re: Now the time to convert IRA? Date:  10/18/2008  5:03 PM
Author:  pauleckler Number:  64297 of 75383

According to IRS Publication 590 p. 39 (available from the irs.gov website) Distributions Fully and Partially Taxable, if you made non-deductible contributions to your regular IRA, and filed Form 8606 to keep track of your cost basis, then a portion of the Roth conversion is non taxable. It is tax free only if your cost basis equals or exceed the value converted.

Of course if you made deductible contributions or had profits, a portion of the conversion will be taxable.

But to clarify a few points, conversions are taxed at ordinary income tax rates. Not at capital gains rates. I'm not sure about the in kind transfer requirement. They are allowed from IRA to IRA. Not sure about conversions.
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