UnThreaded | Threaded | Whole Thread (9) | Ignore Thread Prev | Next
Author: aj485 Big gold star, 5000 posts Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 81641  
Subject: Re: Trad IRA -- why? Date: 1/29/2010 12:46 PM
Post New | Post Reply | Reply Later | Create Poll Report this Post | Recommend it!
Recommendations: 3
Does this mean that I could make both the 2009 and 2010 contribution to the Trad IRA and convert the account with both contributions now (before 4/15/10)? Is there a deadline for the conversion? Any reason why NOT to do that?

If you don't have any Traditional IRAs (including rollover IRAs) that have pre-tax money in them, yes - you can convert 100% of the non-deductible contributions however quickly your custodian will let you.

If you have Traditional IRAs that have pre-tax money (contributions or gains) in them, then all conversions must be pro-rated.

For instance, if your entire IRA portfolio consists of $90k pre-tax in a Traditional IRA from a rollover and this $10k in non-deductible contributions, and you converted $10k - $9k of the conversion would be considered to be pre-tax, and you would pay taxes on it. $1k would be considered to be the non-deductible basis, and would not be taxed.

You will need to file IRS Form 8606 http://www.irs.gov/pub/irs-pdf/f8606.pdf

Post New | Post Reply | Reply Later | Create Poll Report this Post | Recommend it!
Print the post  
UnThreaded | Threaded | Whole Thread (9) | Ignore Thread Prev | Next


The Retire Early Home Page
Discussion on accelerating retirement day.
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Community Home
Speak Your Mind, Start Your Blog, Rate Your Stocks

Community Team Fools - who are those TMF's?
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.