This year I made converted a traditional IRA to Roth. The balance was $18,600. $18,000 of which were non-deductible contributions for the last 4 years. I understand I will be paying tax on $600 for the privilege of the conversion. One question I have is, given the market conditions the last 4 years, I might very well have had an investment loss at conversion time, though in fact I ended up with a small gain. Would I then be entitled to take a deduction on my 1040 for the loss at conversion time, if the total traditional IRA balance converted is less than the sum of non-deductible contributions ?

I ask this because I wonder about future years, in which I intend to continue to make non-deductible contributions to my traditional IRA, and then convert them to Roth, since I'm not allowed to directly contribute to a Roth due to income limitation. I'm wondering if I should invest in the traditional IRA contributions in something risky before converting the contributions to Roth. I don't mind paying the taxes on any investment gains each year when converting, as long as I can take a loss too if it doesn't do well.

But a simpler strategy might be to contribute to the the traditional IRA and convert right away if possible, and then the gain/loss would be close to zero, but I'm not sure if a delay is necessary when converting contributions. I just don't like the idea of annual contributions sitting for 1 year in a money market fund before conversion.

My next question is about taxes on SEPP withdrawals. I plan to start taking SEPP from my Roth and 401k around age 50-55. Hypothetically, it's possible that I would have an investment loss in the Roth if I do very poorly in it investment wise. When taking withdrawal from a Roth, is any hypothetical investment loss deductible ?