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Author: gyung Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121478  
Subject: Roth conversion acct Date: 1/27/1999 1:54 PM
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In 1998 I combined 2 accts. into 1 roth conversion IRA:

1. I had an 401K which went into a rollover IRA which I converted into a Roth conversion IRA ($10K)

2. I converted my traditional IRA into that same Roth conversion IRA. ($10K)

I have a few questions about this:

1. What paperwork should I be expecting? (one 1099-R, two 1099's)-(I don't know if 1099-R is the correct name for IRA distributions, but in this example I will use 1099-R to make things simple)

2. For the 401K money I get taxed for the full amount converted, but for the traditional IRA, $8K of the $10K was non-deductible money I put in each of the past 4 years. I did submit 8606's for them. But will I get a 1099-R taxing me for the full amount of my traditional IRA? If so, what do I do to explain $8K was my basis from previous non-ded. contributions?

Also, I sent in the four 8606 forms this year. I only learned about that form this year. Do you think I will get penalized for sending them in late? Does this have an effect on how much my 1099-R for the traditional IRA distribution is?
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Author: TaxService Three stars, 500 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 9073 of 121478
Subject: Re: Roth conversion acct Date: 1/27/1999 3:38 PM
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1. I had an 401K which went into a rollover IRA which I converted into a Roth conversion IRA ($10K)

2. I converted my traditional IRA into that same Roth conversion IRA. ($10K)

I have a few questions about this:

1. What paperwork should I be expecting? (one 1099-R, two 1099's)-(I don't know if 1099-R is the correct name for IRA distributions, but in this example I will use 1099-R to make things simple)

***1099-R's are what you should expect to receive.

2. For the 401K money I get taxed for the full amount converted, but for the traditional IRA, $8K of the $10K was non-deductible money I put in each of the past 4 years. I did submit 8606's for them. But will I get a 1099-R taxing me for the full amount of my traditional IRA? If so, what do I do to explain $8K was my basis from previous non-ded. contributions?

The Form 8606 is made up a little differently this year. Use it to calculate the taxable portion of your rollovers. Just follow the instructions. On the bottom line, if you rolled over all of your IRAs, leaving none behind, you will discover that your basis (non-deductible contributions) will not be included in your taxable distributions.

Also, I sent in the four 8606 forms this year. I only learned about that form this year. Do you think I will get penalized for sending them in late? Does this have an effect on how much my 1099-R for the traditional IRA distribution is?

***If you are, cop a plea! The IRS is usually pretty generous in relieving penalties!=:) As I said earlier, your basis, in the traditional non-deductible IRAs, will not be taxed.

"Jack"

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Author: TMFTaxes Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 9100 of 121478
Subject: Re: Roth conversion acct Date: 1/27/1999 8:31 PM
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[[ In 1998 I combined 2 accts. into 1 roth conversion IRA:]]

Congrats...

[[ 1. I had an 401K which went into a rollover IRA which I converted into a Roth
conversion IRA ($10K)

2. I converted my traditional IRA into that same Roth conversion IRA. ($10K)

I have a few questions about this:

1. What paperwork should I be expecting? (one 1099-R, two 1099's)-(I don't
know if 1099-R is the correct name for IRA distributions, but in this example I
will use 1099-R to make things simple)]]

You'll get 2 1099R's. One for the 401k -> IRA -> Roth and one for the traditional IRA to your Roth. At least you SHOULD.

[[ 2. For the 401K money I get taxed for the full amount converted, but for the
traditional IRA, $8K of the $10K was non-deductible money I put in each of
the past 4 years. I did submit 8606's for them. But will I get a 1099-R taxing me
for the full amount of my traditional IRA? If so, what do I do to explain $8K
was my basis from previous non-ded. contributions?]]

You'll get very friendly with IRS Form 8606, Part II, where you'll report the basis in your IRA. Remember that your broker doesn't know how much "basis" you may have in your IRA. So they are required, by law, to show the total amount as taxable. So it is YOUR responsibility to report your basis. And you'll do so on IRS Form 8606.

[[Also, I sent in the four 8606 forms this year. I only learned about that form this
year. Do you think I will get penalized for sending them in late?]]

It's possible...but I doubt it.

[[ Does this have
an effect on how much my 1099-R for the traditional IRA distribution is?]]

Nope...

Hope this helps...
TMF Taxes
Roy

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