If you have a regular after-tax IRA, and it's now worth same or less than when you opened it, wouldn't it be best to convert that IRA to a Roth IRA this year? Since there would be no pre-tax earnings in the IRA, shouldn't it be a tax-free event (no taxes or penalties)even if you are under 59-1/2?Most folks' IRA's are probably pre-tax, but I'm sure there are some after-tax IRA's out there. Couldn't find this exact situation anywhere - most conversion discussions focus on pre-tax IRA's. Am I missing anything? I hope not. Because I've made such excellent investment choices, my IRA balance dropped below the amount of my nondeductible contributions, so I converted earlier this year. As long as your 2001 AGI is under $100,000 and you don't file married, filing separately, you're good to go.Just one caution. Remember that all your IRA accounts are lumped together when figuring the taxable portion of a distribution, which is what a conversion to Roth is. Some people think that if they've kept all their nondeductible contributions in one account they can convert just that account and use up all their basis. It doesn't work that way, as shown in Part I of Form 8606.Phil Marti
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