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URL:  https://boards.fool.com/i-have-a-regular-ira-in-which-i-have-made-12000-10440820.aspx

Subject:  Re: Conversion to Roth IRA of non-deductible con Date:  12/1/1998  7:36 PM
Author:  TMFTaxes Number:  6642 of 129573

[[I have a regular IRA in which I have made $12000 worth
of non-deductible contributions.

If I open a Roth IRA and do a partial rollover of my
regular IRA into it in the amount of my non-deductible
contributions ($12000), I would expect that I don't
have to pay any taxes on the conversion, since taxes
have already been paid on that amount.
Is that true? Can anybody confirm?]]

Nope. That is NOT how it works at all. IRS considers your current IRA as one big homogenious IRA. And any distributions from the IRA (such as to make a Roth conversion) must be done on a pro-rata share.

For example, say your IRA was worth $50k, and you have $10k of non-deductible contributions. This means that 20% of your IRA would be "basis". If you made a $10k conversion to a Roth IRA, only 20% (or $2k) of that amount would be considered your "basis", and the remaining $8k would be taxable.

See how it works?? If you would like to read more about these computations, you can do so at IRS Publication 590 at the IRS web site.

TMF Taxes
Roy

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