The Motley Fool Discussion Boards

Previous Page

Financial Planning / Tax Strategies


Subject:  Re: Figuring Tax Implications of IRA Conversions Date:  1/31/2007  11:35 AM
Author:  Wradical Number:  91512 of 132160

On 4/21/03, I had an traditional IRA worth $30,700. In December 2006, I converted it to a Roth and it had a value of $51,600. The difference between those two numbers is pure profit.

The problem, though, is that I don't know:
(1) how much of the initial $30,700 is contribution vs profit.
(2) how much of the contribuion was made with after-tax dollars.

Well in an ideal world, you'd want to know that before you do a Roth conversion.

I've always been under a company pension plan. If I remember correctly -and I'm not at all sure this is true - doesn't this mean all my traditional IRA contributions would have been made with after-tax dollars?

Very possibly, but it depends on your income and filing status.

If so, it seems like I really need to do some research to see if there's any way at all I can figure out what portion of the $30,700 was actually contributed. Failing that, should I just try to estimate the number? I don't ever recall my tax preparer asking me about filling out a form for IRA contributions...

Start out working backwards in time, over the years when you made IRA contributions. Is there a Form 8606 included? That would tell your basis in your IRAs. (And it should reflect the totals of all your IRA accounts, if there are more than just the account you converted this year.) Otherwise, compare the history of your IRA account, for when you made contributions, and see if you took a deduction on your tax return that year. If not, that year's contribution gives you basis; and it could be all or part of that year's contribution.


Copyright 1996-2021 trademark and the "Fool" logo is a trademark of The Motley Fool, Inc. Contact Us