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I was wondering about the difficulties that have traditionally been associated with non-deductible IRAs. The accounting doesn't seem that hard to me. I was also wondering whether, if my income got low enought to allow for conversion, if I could convert my non-deductible IRA to a Roth, and if there would be any difficulties with that process. What do you all think?
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I was wondering about the difficulties that have traditionally been associated with non-deductible IRAs. The accounting doesn't seem that hard to me. I was also wondering whether, if my income got low enought to allow for conversion, if I could convert my non-deductible IRA to a Roth, and if there would be any difficulties with that process.

If you can do basic arithmetic there's nothing to Part I of Form 8606, which is where you do everything associated with nondeductible contributions. I think people's problems have arisen because they didn't keep good records and they didn't report their nondeductible contributions as they went along.

It's a piece o' cake to convert. If you convert the whole thing, you subtract your previously-taxed basis from the amount converted and you have your taxable conversion income. (See Part II of Form 8606.) If you only convert part you do the same 8606 Part I calculation you would do if you were taking a regular distribution.

TMF ExRO
Phil Marti
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