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dmmeyer writes (in part):

My question is, if my income in 2000 is below $100k, can I convert that $1100 (plus whatever gains I have) back to a Roth IRA. And, if so, how much is income for tax purposes? The total amount or the conversion, or the total amount less the $1100 (which I've already paid taxes on in 1999, since the recharacterized traditional IRA wasn't deductible for me).

I reply:

If your AGI is less than $100,000 in 2000, you may convert as much or as little of your traditional IRA to a Roth as you like. Don't forget to file Form 8606 to report your basis in your IRA. Assuming that the recharacterized $1100 contribution is the only contribution you have ever made to a traditional IRA, and that you currently have no "rollover" funds in a traditional IRA, then, as you suspected, you will be taxed in 2000 on the difference between the total value of your IRA when it's converted and your $1100 basis. One final point -- a conversion for the year 2000 must be completed by December 31, 2000. If you convert after then, you'll need to meet the AGI test for 2001. Good luck! --Bob
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