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Goodeeds,

I think it would be easier to answer this question with a formula, as follows:

the taxable portion of your distribution is:
5,500 - 5,500* (5,500/(5,500 + 200,000)),

assuming the following:
5,500 amount contributed to IRA in Jan of 14 - the "Contribution"
5,500 - amount distributed to the Roth IRA in Jan of 14 - the distribution
200,000 - fair market value of IRA at end of 2014 - assumes 401k was rolled over to the IRA.

since the IRA contribution was immediately converted to a roth(and never deducted for tax purposes), it has a "basis" of $5,500, and therefore, in IRS speak, the portion of the distribution that had no basis is taxable.

You should look at IRS publication 590, worksheet 1-5(on page 44) of the following link:

http://www.irs.gov/pub/irs-pdf/p590.pdf

It has a worksheet that gets to the same calculation as above

given these numbers, the portion that is taxable is $5,352 by my calculations.....

I used $5,500 for the amount contributed to the IRA because that is the maximum amount you can contribute for 2013(didn't check the amount for 2014)

Hope this makes sense
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