I've converted my 401(k) to an IRA and want to convert that to a Roth IRA now. I've finished my taxes and am trying to determine how much of my IRA I can convert to an Roth IRA, whittling my tax refund down to zero in the process. But, I don't understand how to calc the basis of my IRA. Is it my 401(k) contributions + my employers matching contributions, or are my employer's contributions lumped in with the dividends and thus taxable during the conversion?Thank you,
If you were not taxed on the employer contributions, then they are not part of your basis in the IRA. Basis results from making after tax contributions to your original 401k plan. So its unlikely you would have basis in an IRA that was rolled from a 401k.
<< I've finished my taxes and am trying to determine how much of my IRA I can convert to an Roth IRA, whittling my tax refund down to zero in the process. >>You've already received the correct answer to your basis question, so I won't go there. I'm concerned about the quoted statement, because it looks to me like you're planning on showing the conversion as 1999 income. You can't do that. Conversions are income in the year converted, unlike contributions, which can be attributed to the prior year when made before the due date of the return. If you convert now, it's year 2000 income.TMF ExROPhil Marti
Thank you, After sleeping on it and letting it percolate a bit, It makes better sense to me that since my 401(k) savings was "pre-tax", my "basis" would be zero. I need to pay tax on any amount I roll over. Thank you also for pointing out that as a conversion the "income" or roll-over amount has to be counted in the year it's rolled over. So it won't reduce my 1999 refund, but will impact my 2000 taxes instead.What I guess I should do is open the account with a "contribution" prior to 4/17/00 to start the 5 year period from 1999 and not 2000. My understanding is that the 5 year period is satisfied for the entire account by the "earliest" money in the account. Is that right?
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