Skip to main content
No. of Recommendations: 0
Goldstucker writes (in part):

Does this require a new account to be setup (Roth, IRA, Non-traditional IRA)? How do you bookkeep that taxed contribution. You've already paid taxes on it. You shouldn't have to pay taxes at distribution. Do you keep a copy of tax return with account statement? Your co-mingling taxed deferred and taxed contributions. Yes you can recharacterize but were do you move the money?

I reply:

You do not need a third account; simply recharacterize Roth IRA contributions (and associated earnings) into any traditional IRA account that you may already have. That account then will have a combination of deductible and non-deductible (because the combination of your participation in a 401(k) and your income renders you ineligible to deduct contributions; if you did not participate in a 401(k), your contributions would be deductible) contributions. As you correctly infer, your non-deductible contributions will give you a basis in the traditional IRA. This is reported annually to the IRS on Form 8606 (in any year for which you have made a non-deductible contribution), which you will include with your tax return. --Bob
Print the post  


The Retirement Investing Board
This is the board for all discussions related to Investing for and during retirement. To keep the board relevant and Foolish to everyone, please avoid making any posts pertaining to political partisanship. Fool on and Retire on!
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.