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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 75833  
Subject: Re: Trad IRA -- why? Date: 1/29/2010 3:18 PM
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I was reading the 8606 the other day but got lost on the "add line x and y, enter that number here, subtract this, enter this now..." I guess I have to plug in actual numbers.

That sometimes helps me.

I need to understand pro-rating since my spouse's IRA has pre-tax money. The intent is to convert the whole account, not just a portion.

If you're converting the whole amount in your spouse's acount, then pro-rating isn't really an issue. You will get the value of the account as of the conversion, and subtract the non-deductible contribution amount (aka 'basis') from that. The remaining amount is what will be taxed. It's only if you're doing partial conversions when you need to deal with pro-rating.

If I make the 2010 contribution now and convert before filling, do I report the value of the account (line 6) as $0 next year?

If you convert all Traditional IRAs before the end of 2010, then yes, the amount on line 6 for the 8086 that is filed with your 2010 tax return will be $0.

Will that complicate things?

It shouldn't. All it will mean is that you've done a total conversion.

AJ
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